NEW OVER OLD

Zambia 2014 | MINING, ENERGY & INDUSTRY | INTERVIEW

TBY talks to Michael Bentley, Dealer Principal at Action Auto, on the new car market and the challenges posed by second-hand vehicle sales.

Michael Bentley
BIOGRAPHY
Michael Bentley heads up Action Auto Limited Zambia, a position he has been in since 2000. He graduated in Mechanical Engineering from the Durban Institute of Technology and is also the President of the Zambia Sports Fishing Association.

What has been your performance in the last five years and how has the car industry in Zambia evolved?

Zambia's new vehicle industry has been growing at a slow pace over the past five years from 3,500 units a year to about 4,500 in 2013. The 2014 forecast is 4,700 units. Economists have a highly optimistic growth outlook of about a 20%, which should take the total market size to 6,500 units by 2017. Nevertheless, compared to the second-hand imported vehicles market, it is still a relatively small amount—there were about 40,000 grey imports in 2013. General Motors South Africa (GMSA) has supported us in introducing the Chevrolet Brand for Africa in 2010, allowing us to participate in the passenger segment through providing off-road ready SUVs and reasonably priced saloon cars. In 2013, we were market leaders in the saloon new vehicle sales segment, which is a big achievement as the majority of used vehicle imports are in fact passenger saloon vehicles.

To what do you owe your growth?

Although many of the new vehicle sales are owed to government purchases, we have seen a growth in purchases from private consumers and businesses. Also, thanks to a number of macro-economic developments taking place in the country, a growing middle class, and the introduction of vehicle finance by commercial banks and other financial lenders as well as a reduction in interest rates, our market share doubled in 2013. Coupled with a rigorous marketing campaign with the support of GMSA through advertising in a variety of media outlets, including social media, we partner with organizations such as the Zambia Chamber of Commerce and Industry (ZACCI) and the American Chamber of Commerce, which have successfully helped in promoting the Chevrolet and Isuzu Brands. In addition, throughout the year, we sponsor a number of events with the aim of bringing families together, such as the Urban Circus. Most importantly, Action Auto's commitment to providing customer service of the highest standard through following the GM Difference Standards have also helped in creating a number of life-long customers. A significant percentage of our sales are generated from word-of-mouth endorsements and the enthusiasm of our existing customers, some of whom own four or five generations of the Isuzu KB.

Which of your products has the biggest demand?

The Isuzu KB pickup has been and still remains our biggest brand in terms of sales volume. The Isuzu KB has a legendary and iconic status for its toughness and dependable performance, whilst offering versatility and comfort. It is designed and engineered to deliver each time you are behind the wheel, and most importantly built to endure rough roads and terrain. Although the Chevrolet Brand has grown in popularity, a major factor is price. In Zambia, the duty is less on a utility vehicle like the Isuzu compared to a passenger vehicle. Compounded taxes on utility vehicles are about 46%, and on a saloon car or a station wagon they are 94%. This makes the price difference quite substantial and therefore also contributes to the sales in volume.

Second-hand car sales pose a big threat to the new car market in Zambia. What strategies are you following to compete with this industry?

Current legislature allows for second-hand vehicles from Japan and the UK to be imported into Zambia aimed at affording the average citizen the opportunity to own a vehicle. Over 40,000 grey units were imported in 2013. Regrettably, a large percentage of these units are ill equipped for African requirements and, in most cases, over 10 years old, and this unfortunately has contributed to an increase in road traffic accidents. Our strategy is to offer vehicles with constantly improving technology made specifically for African weather, terrain, and road conditions. Our after-sales support, service kits, parts and accessories are also restricted to GMSA-sourced vehicles.