Coronavirus and its effect on the car sales business

Thursday April 23 2020

The road shoulders that are normally filled

The road shoulders that are normally filled with parked cars that have just been driven from Mombasa to Kampala are all vacant, like no cars have ever parked there. NET PHOTO  

By Roland D. Nasasira

When you ride a bicycle or take a walk from Nakawa at Yuasa Investments Limited to Banda, all Kampala suburbs located on Jinja Road, you will notice that all car bonds such as Tadashii Trading Company Limited, Cosmos Uganda Limited, Future Group Company Limited, Jyoti Motors and Coin Motors, among many others, are closed for business.

The road shoulders that are normally filled with parked cars that have just been driven from Mombasa to Kampala are all vacant, like no cars have ever parked there. The swarm of car brokers hungry to make a sale and earn commission that normally welcome you to bonds seated under trees are also gone.

As if this is not enough, the mobile money points, eateries and makeshift desks belonging to cobblers are all currently deserted, save for one or two fruit vendors selling bananas.

No prospective buyers
According to Moses Odama, a broker who I find cleaning used cars, the occurrence of the Coronavirus pandemic in Uganda, just like many countries, coupled with the lockdown, has affected the business in a number of ways. He says sometimes, days go by without a prospective customer visiting the place. Those that do only ask about car prices, hoping that the cost of cars could have dropped, and just walk away.

“At the moment if you want to buy a car from any of the bonds, it is just a phone call away to someone in the sales office and you will be a happy car owner. You will have it delivered to your home by a carrier because you cannot drive it on the road without permission from concerned authorities,” Odama explains.

During pre-coronavirus periods, Odama says most bonds sold between 10 to 50 or more cars per day, lately to a point where there is no car sale being made at all.


Test driving
Samuel Hooper, a motorist, agrees with Odama, reasoning that for as long as the pandemic still exists, coupled with the lockdown, no one needs to buy a car that they cannot even test drive because of the fact that it is only permitted cars that are on the road.

Eddie Matovu, a local car dealer, weighs in on the matter, stating that all car bonds and showrooms are not making any sales because they are locked. They (bonds) are only open to receive cars from Mombasa since they are considered as cargo but cannot sell to anyone, except the Government.

“You can still buy a car from Japan and it will be shipped to Mombasa port. The challenge is that Ugandan drivers cannot pick and drive cars from Mombasa and those in Kenya cannot drive them to Kampala because of the lockdown in the two countries,” Matovu explains.
“If your car is in transit and it has reached Mombasa, you can only get it to Kampala by car carrier and still pay its taxes and get its number plates from Uganda Revenue Authority since it is open,” he adds.

Increased cost
Matovu, however, expects that the cost of cars will increase slightly after the Covid-19 pandemic has cleared because few people will not only be left with money to spend on cars but that the rising dollar effect will also impact car sales. Odama agrees with Matovu, arguing that the car cost will shoot up because they will be on demand.

“The money that people have in this situation is for buying food for their families and cars are not a priority. Those that will have some money left will have to pay a little more for a car of their choice because of the strength of the dollar against the local currency,” Matovu explains.

China effect
According to World Economic Forum, an online portal, the occurrence of Coronavirus which began in Wuhan in China meant that automotive factories had to shut down. The portal adds that car sales in China fell by 92 per cent in the first half of February, according to data from the China Passenger Car Association (CPCA), and that the impacts are being felt around the world, as shortages affect production.

“China is the world’s biggest car market, and Wuhan, the city at the centre of the outbreak, is known as a “motor city” for being home to auto plants including General Motors, Honda, Nissan, Peugeot Group and Renault. For Honda alone, Wuhan accounts for about 50 per cent of total production in China,” the portal says.

Just like people are not visiting showrooms and bonds in Uganda because of the lockdown, the portal adds that new vehicle sales in Japan, including trucks and buses, fell 10.3 per cent in February from a year earlier to 430,185 units, the fifth straight double-digit monthly fall, partly because the spread of the pneumonia-causing virus kept buyers away from showrooms.

Japan effect
According to Japantimes, an online portal, the automakers, mired in a sales slump, are already experiencing delivery delays with some models taking longer than expected to restart production lines. The portal adds that delivery deadlines of some cars, including the compact Fit, have already been missed because of disruptions to parts imports from China, according to Kazuo Kato, chairman of the Japan Automobile Dealers Association.

“With the auto industry being Japan’s largest manufacturing sector, making up 19.0 per cent of total shipments by manufacturers and employing 5.46 million people in the country, the government is anxious about the supply chain issues but has no immediate remedy to offer,” Japantimes says.