With the rising purchasing power within Ethiopia’s small-but-growing middle class comes the aspiration to drive better cars. But it still has to be affordable. Holland Car, a Dutch-funded company, is making this possible by assembling cars in Ethiopia with cheap imported parts. A unique solution on the African continent.
By Luc van Kemenade, Addis Ababa
It costs a small fortune to get a second hand vehicle from Europe through the port of Djibouti into landlocked Ethiopia. Although taxes on second hand imports have been reduced recently, one of those supposedly cheap cars can still cost double its price once it has gone through customs. A twenty-year-old Toyota Corolla, for example, can easily cost up to 12,500 euros.
But various investors in Ethiopia saw an opportunity to come up with a solution. Import car parts from China, for example, and with the help of cheap labour assemble them in Ethiopia into finished cars. Holland Car is one of those investors.
The supply of new models assembled in Ethiopia is on the rise. More and more “Ethiopian” cars are seen among the chaotic traffic, although still dominated by rundown Lada cabs and Toyota Corollas.
Sishah Yohannes, a 40-year-old pilot with Ethiopian Airlines, has been driving his Awash for a month now. It was assembled by Holland Car in Ethiopia. “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.”
Once Holland Car’s general manager, Tadesse Tessema, managed to convince the Ethiopian government to lower import taxes on spare parts, he started production. In no time he presented his first three models, all named after Ethiopian rivers: Abay, Tekeze and Awash.
Soon other car assemblers followed suit. Among them, Yangfan Motors, a former partner of Holland Car, launched its own line with three models – Lifan Cars. Among the models proving to be a huge success in the country is the 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.
The industry is growing so fast that the big names in the motor industry are also making a move. Hyundai is the latest competitor for the passenger’s car market in the country. The South Korean company has employed heavy artillery for this. It has appointed Haile Gebreselassie, the internationally acclaimed long-distance track and road running athlete, as its ambassador. And the athlete is also the sole importer. According to Gebreselassie, the assembly plant is under construction and personnel will be trained to assure “international standards”.
Buzzing on his success and the competition he managed to initiate in the market, Holland Car CEO Tadesse is even embarking a on new project where he will be working towards producing the first fully Ethiopian cars.
A huge factory to cater for this is being built and is expected to be completed in two months time.
Sisha is positive about the emergence of this boom in the local car industry. “As a pilot, I can afford different cars from all over the world. But I prefer to encourage guys like Tadesse and Haile by buying Ethiopian ones. If the quality is there, why not.”