Ethiopia: Price of Vitz Cars Surges By 80,000 Birr in Two Months

Car, dashboard.

The price of Toyota Vitz, one of the most widely used vehicles in Ethiopia, has increased by as much as 80,000 Birr within just two months, The Reporter has learnt. The increase is attributed to the fall in imports of the vehicles because of the high excise tax levied by the government since last year.

At Meskel Flower, where there are many retailers of the car, the 2001 model Toyota Vitz, which is available in three petrol engine types ranging from 68 to 106 horsepower, is being sold for 680,000 Birr.

The 2002 Toyota Vitz model is also retailed for 750,000 birr, while the 2004 model, available in three types of engines, costs 850,000 Birr, according to traders The Reporter spoke to.

"The vehicle is not being imported now. Until August, everyone was selling what they have in their stock. Now that it has been depleted, the demand has increased although there is a low supply of the car," said a retailer around Kirkos area.

Last year, a new excise tax rate that increased the tax levied on old cars significantly was introduced by the government. The adjusted tax rates reach as high as 500 percent.

"Unfortunately, although the huge tax was meant to make new cars affordable and discourage old vehicles, now it has made both unaffordable," said Dagim Tekie, a Mechanic and Car Dealer working around Sebara Babur.

An increasing trend of purchasing Vitz by individuals to sell it for a higher price later on has also contributed for the price surge, explained the traders at Meskel Flower.

"Some are desperate to buy the car even though it has some technical and mechanical issues due to the surge in demand," said Moges Kefeyalew, a broker who works in a car sales shop near Meskel Flower.

Last month, members of the Budget and Finance Affairs Committee of the Ethiopian Parliament visited the middle and high tax payers' branch offices in Adama and Hawassa. During the visit, the committee concluded that even if the new excise tax proclamation is quite good at introducing new cars into the system, the small number of automobiles imported into the country has reduced the income of the customs office.

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