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Home Business Business News

Motor vehicle industry experiencing mixed fortunes—Analyst

by Innocent Helema
27/03/2014
in Business News, Front Page
3 min read
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Motor vehicle sales are said to be on the rise
Motor vehicle sales are said to be on the rise

Total sales of motor vehicles in February jumped by 26 percent to 176 vehicels compared to January’s 140, but the trend over the last 13 months shows a general decline, according to a latest industry report.

The Motor Traders Association (MTA) February report which includes sales for 21 brands, including Toyota, Ford, Nissan, Tata and Kia indicates that since February 2013, the motor industry has sold 144 vehicles and had the highest sales at 263 vehicles in March of the same year.

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In November 2013, the industry sold 194 vehicles, however, the sales dropped to 148 in December, before falling further to 140 in January 2014 and thereafter rose in February.

The industry’s analyst told Business Review this week the industry is experiencing mixed fortunes, with some enjoying better sales due to economic performance while other players have been affected by the looting of public funds at Capital Hill dubbed Cashgate which has seen government cutting on expenditure.

“The situation is mixed because some sell to government departments who are likely to be affected by the Cashgate and the donor aid freeze. Others are, however, enjoying better sales with the improved economic outlook,” said the analyst who sought anonymity because he is not authorised to speak to the media.

But Countrywide Car Hire managing director Mike Mlombwa, who is also Indigenous Businesses Association of Malawi (Ibam) president, said the increase in demand for February this year is due to some big multinational companies operating in the country.

“Most Malawian businesses, including car hire operators cannot afford to buy new cars from dealers and, therefore, resort to buying reconditioned second hand cars from Japan.

“To most businesses, this does not feel like an electionsyear because business has not picked up yet. Cashgate has really affected businesses because some payments have not been done todate and thereby greatly affecting operations,” he explained.

Mlombwa said the transport industry would perform better and prompt economic growth if the government re-introduced concessionary rates for motor vehicles for car hire companies.

Commenting on the overall economic outlook, he quashed government’s and some analyst’s argument that the economy has stabilised and is set to pick up in the foreseeable future.

Mlombwa argued that, so far, they have not started to feel the impact of the said economic growth.

In November last year, donors under the Common Approach to Budget Support (Cabs) announced the withholding of $150 million in budgetary support due to the Cashgate which has resulted in government departments struggling to meet their budgetary requirements.

But President Joyce Banda on Monday said the country’s economy expanded by 6.1 percent in 2013, buoyed by an increase in production levels of some key cash crops and improved capacity utilisation in the manufacturing sector.

This growth represents 0.7 percentage points higher than the earlier projected 5.4 percent growth rate. In 2012, the economy grew by a 1.8 percent.

President Banda said the revision in the growth rate for last year is based on the increase in production of both cash crops such as tobacco and food crops such as maize and rice.

She also attributed the upward revision of the rate to the expansion in the capacity utilisation among manufacturers in the wake of the availability of fuel and foreign exchange.

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