6 February 2013

Tanzania: Shilling Depreciation, Duty Drive Out Car Dealers

DEPRECIATION of the shilling and higher import duty have driven several car dealers out of business as many people fail to afford buying the vehicles.

The car dealers, estimated to number between 70 and 100 in Dar es Salaam alone, are also concerned about Tanzania Revenue Authority (TRA) uplifting of prices despite the fact that the costs are posted on international dealers' websites. They said sales volumes have dropped between 40 and 60 per cent in the last two to three months.

Last January dealers sold an average of 10 cars compared to four in January. C.M. Company Ltd President Mr Charles Mtawali said the shilling depreciation has impacted negatively to their business because it has pushed up car prices beyond the affordability of many.

"We haven't sold a car in January," Mr Mtawali said adding: "We have to stop importation to observe the shilling's trading patterns before we make a second move." The shilling since last January depreciated by almost five per cent to over 1,636/- as quoted by commercial banks.

The C.M. President acknowledged that this is a low season as car buyers have a number of obligations to attend, but this year is the hardest compared to the previous, as shilling fall pushed prices to the roof. "We are struggling to pay even our staff salaries," he said.

BISMA Motors Sales Executive Ms Rachael Kweka said the firm closed a showroom in Morocco area after sales were so bad and workers have not been paid January salaries. "It is not due to competition but shilling's depreciation pushes car prices up by almost 30 per cent.

We receive good number of would-be-buyer but price are driving them away," Ms Kweka said. The favourite brand like Toyota's Vitz, Carina, IST, Rav4, Noah; and Nissan's X-Trail prices are untouchable. For instance a Vitz which was selling at 6m/- last year today is going for between 8.5/- and 9.0m/- a piece.

Carina Si and Ti prices also have gone up from around 8m/- to over 10m/-, Noah old model from 9.5m/- to 14.5m/-, Rav4 from 10m/- to 15m/- while X-Trail from around 15m/- to over 22m/-. Shaymaa Commission Agent Director Mr Mohamed Farid Mohamed said car's import duty has gone up enormously to impact negatively sales volume thus threatening to force them out of business.

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