From: Radio Netherlands Worldwide: With public purchasing power on the rise, Ethiopia’s small-but-emerging middle class yearns to cruise around Addis Ababa in style. But it has to be affordable. Holland Car, a Dutch-funded company, invests in assembled models. A simple, but quite unique solution on the African continent.
The supply of new models assembled in Ethiopia is increasing and this is reflected in the streets of the capital city. More and more “Ethiopian” cars are seen among the chaotic traffic, still dominated by rundown Lada cabs and Toyota Corollas.
It costs a small fortune to get a second hand vehicle from the West through the port of Djibouti into landlocked Ethiopia. Although taxes have been reduced, they can still rise up to over 100 percent of the purchase value plus the transportation costs, unaffordable to many. For a twenty-year-old Toyota Corolla, for example, you can pay up to 12,500 euros.
The solution is simple: import spare parts, from China for example, and assemble them in a factory with relatively cheap labour. Although a simple strategy, it’s quite unique on the African continent. Various investors in Ethiopia saw the opportunity and grabbed it. Holland Car for example, a Dutch-funded company, is the first.
Sishah Yohannes, a forty-year-old captain at Ethiopian Airlines, has been driving his Ethiopian-assembled Holland Car Awash for a month now. “I’m really proud when I see the name written in Amharic (official language in Ethiopia) on the back,” he says while parking at the Bole Medhane Alem Church. “This is what I’ve been waiting for: a good Ethiopian product after all this talk about economic growth.”
New family car
Holland Car’s general manager, Tadesse Tessema, convinced the Ethiopian government in the past to lower import taxes on spare parts. This made business even more attractive. Shortly after, he presented three models, all named after Ethiopian rivers: Abay, Tekeze and Awash. Recently, they launched a new family car: Shebele.
Other car assemblers followed suit. First, there was competition from Holland Car’s former Chinese partner. When Yangfan Motors launched three models of its Lifan Cars in Ethiopia, one of them looked a lot like Holland Car’s Abay. The two companies decided to split after a dispute.
A definite attraction in the streets of Addis is Lifan’s Mini-Cooper look-a-like, the Lifan 320. The company prefers to describe it in masculine terms as a “mini-SUV with the power of a bear”, but it’s a “typical lady’s car”, says a car salesman.
Hyundai is the latest competitor for the passenger’s car market in Ethiopia. The South Korean company has employed heavy artillery for this. It has Haile Gebreselassie, the internationally acclaimed long-distance track and road running athlete as its ambassador, investor and sole importer. The assembly plant is under construction and personnel are to be trained to assure “international standards”, the successful athlete said.
Satisfied with the competition in the market he initiated, Holland Car CEO Tadesse is preparing for a new step. He’s building a gigantic plant that will be finished in two months. From that day on, he will slowly reduce the import of parts and work towards producing full Ethiopian cars.
“As a pilot, I can choose from different cars from all over the world,” Sisha says. “But I prefer to encourage guys like Tadesse and Haile by buying Ethiopian ones. If the quality is there, why not.”