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Muluneh Tilaye, 41, shares a brick house he
owns with four members of his family near
Kaliti, on the eastern outskirts of Addis
Abeba. As the returns at the promotional
enterprise he founded two years ago picked
up, his urge to own a car increased.
Muluneh decided he would be pleased to make
the roundtrip to his wife's workplace in
Piazza daily. Moreover, ownership of a car
would surely be to the convenience of his
kids, who are in kindergarten at a school in
Gerji.
The question that spins in Muluneh's mind is
not whether to buy a car or not, but the
dilemma to choose the model that would
consume less fuel and be durable enough to
be passed down to his children.
The past two months took Muluneh through a
number of car showrooms in an effort to find
an affordable car featuring his preferences;
however, he found the tag price of the cars
on display beyond the range of his
expectation.
Muluneh saw a glimmer of hope after his
visit to the Addis Abeba Exhibition Centre
in May 2007 where ED Stelar Trading Plc had
organised an International Automobile Fair.
Price was no longer his concern after he
came across the locally assembled Holland
Car.
"At the exhibition centre I saw what I did
not expect: a car relatively affordable when
compared with other models of similar engine
size," said Muluneh. "Being patriotic and
witnessing cars being assembled in Ethiopia,
means a lot emotionally, let alone to own
one affordably."
He, however, expressed his concerns to
Fortune that he does not dare to spend
his savings on the locally assembled car.
"How on earth would I be courageous enough
to spend my frugal savings that I have
treasured for all these years on a car that
was locally assembled with limited market
exposure in Ethiopia," worries Muluneh.
The first ever car assembling factory in
Ethiopia, Holland Car Plc, located in Modjo,
73Km southeast of the capital, was founded
by Tadesse Tessema (Engineer) and Trino
Company, based in the Netherlands.
With 25 million Br capital, Holland Car
started operation after it received
25,000sqm of land from the Oromia Investment
Commission.
It was at the height of the red terror
campaign under the former Derg regime when
Tadesse left his birthplace, Jijiga, for the
Netherlands and had remained in exile there
for 26 years, earning his degree in
Electrical Engineering.
Upon returning to his mother country,
Tadesse made it his priority to produce cars
for no more than 100,000 Br, making sure to
replace Ladas whose life span is no more
than 20 years.
However, the journey was not all smooth for
Tadesse and his company, as there were
numerous challenges from all angles, the
least of all having to win the trust of such
persons like Muluneh.
Ever since the company started to assemble
the cars, 48 automobiles have been sold at
an average price of 139,000 Br. The Holland
Car, better known to the customers as Docc,
has four cylinders in line, eight valves and
1.6cc capacity. The car's average fuel
consumption is 16.30Km/litre on highways,
while it consumes a litre for every 12Km
travelled on city streets.
Its modestly sized assembly plant in Modjo
lies on a 2,000sqm plot. Cars that are
assembled at the plant are test driven on
the highway connecting Addis Abeba to Adama
(Nazaret).
Semere'ab Serekeberhan, the production
manager of the assembly plant and test
driver of the newly assembled cars, is a
veteran mechanic who for the last 15 years
has been working in garages after he
graduated in Auto Mechanics.
"It is not because we assemble a lesser
quality car that the price is lower,"
Semere'ab told Fortune. "It is rather
to be competitive in the market."
Semere'ab sites cheap labour available in
the country to enable Holland Car to offer
lower prices.
Anteneh Tarmiru, the general manager of
Scopam Plc, told Fortune he was
satisfied with the car's performance.
"I bought three Holland cars and have driven
on highways across such places like Metahara,
Dire Dawa and Awassa and most of the things
about the cars are worthy of their prices,"
approves Anteneh. "Although, prior to my
decision to buy the cars, there were some
doubts about the quality on the basis of
limited market exposure, after I bought the
cars, I was pleasantly surprised."
In other car showrooms, vehicles of the same
engine size as the Holland car command
prices as high as 300,000 Br and above. At
the lower end of the spectrum, second-hand
cars reach prices lower than a new Docc.
For those who want to experience the Holland
Car first-hand, Tadesse told Fortune that
anyone who may be interested in buying the
cars can conduct a test drive to any
direction in the city based on his
preferences. However, from experience gained
in the past, most of the customers preferred
to head in the direction of the Entoto Hill
and toward Churchill Road. Upon the requests
by the customers, there were those occasions
on which test-drives have been conducted
within the city centre and at the outskirts
of the metropolis, he added.
At the Docc assembly plant in Modjo, there
are 60 employees working to assemble parts
imported from Holland. Once in tact, three
stages of inspection are conducted for
quality control before the product is put on
display for sale.
The first stage ensures whether the fuel and
electrical system are orderly functioning
while the second is concentrated on wheel
and head alignments as well as the brake and
power systems. The third stage includes
physical and general inspection of the car
and test-drive within the premises of the
assembling plant that is especially prepared
for this purposes.
Semere'ab Serekeberhan, told Fortune
that the cars assembled at the plant are
strictly worked on with a lot of care and
quality consciousness on the part of the
workers.
"Without doing what we do here, it would
have been impossible to stay in the market
to begin with," claims Semere'ab. "We are
determined to exceed as it is impossible to
penetrate the Ethiopian market without a
quality product."
The record shows that currently there are
180,000 cars in the country, nearly 80pc
(150,000) of the total cruise the streets of
Addis Abeba. Docc is the first and only
locally assembled car in the nation, hitting
the market in February 2007.
Tadesse said that the assembly plant will
produce 1,000 cars a year. However, due to
the fickleness of the market, challenges
prevail over the urge to go the extra mile
and increase production too soon.
"In a country where buying used cars is a
norm rather than an exception, trying to
sell brand new cars is a challenge that Docc
has to face, not to speak of the difficulty
to deal in business with such people like
Muluneh," he added.
Though there is a lot of desire on the part
of many Ethiopians to buy new cars, the
taxes imposed on new motor vehicles reaching
close to 100pc literally pushed many local
potential customers to opt for used cars.
"If the government considered some form of
tax reduction on cars, we would be able to
provide cars at an even more reduced price,"
Tadesse laments.
Despite the lamented challenges, Holland Car
is undergoing plans on an expansion project
to build the capacity with which to produce
brands other than Docc. Subsequently
assembled cars will also be given local
names such as Abay, (Nile).
Projects have been streamlined to address
the main challenges that the company faced
to gain a favourable market share through
credit incentives that would reduce the
relevance of buying used cars on the part of
the Ethiopian customers.
With a 70pc down payment of the tag price,
customers can drive off with a brand new
Docc.
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