Zimbabwe push-starts Willowvale and Deven sale, but privatisation drive may stall

Zimbabwe Willowvale
Willowvale: Assembling BAIC trucks since 2017, but capacity use still low

The government has put its vehicle assembly plants Willowvale and Deven up for sale, but finding a buyer for the old assets will require all the skills of a crafty used-car salesman.

The state-owned Industrial Development Corporation (IDC), in notices published in the press, made a call for “strategic partners” to buy up to 74% of its shares in Willowvale Motor Industries (WMI). IDC is also selling 74% in Deven Engineering, once the profitable assembler of Nissan UD lorries, buses and truck trailers.

Weak sales for locally made cars on the domestic market, aged assembly lines and Zimbabwe’s preference for cheaper imports will weigh on chances to attract buyers. Previous attempts to secure investors, the last of which were five years ago, yielded little interest.

Willowvale in 2017 formed a joint venture, Beiqi Zimbabwe, in a partnership with China’s fifth largest car manufacturer, Beijing Automobile International Corp, for the assembly of BAIC vehicles at its once busy lines in Harare. Willowvale also assembles Mahindra trucks at a small scale.

IDC has tried to sell Deven in 2014, but instead decided to sign a deal with Yutong to assemble buses for the Chinese firm.

“Deven Engineering’s core competence is truck and bus body manufacturing done on a rolling chassis or from semi-knocked down kits. It can also manufacture various road trailers, tankers and specialised vehicle bodies such as compactors, dumpers, tippers, refuse trucks and carry out repair work,” said the IDC in its notice on Thursday.

The IDC even touts Willovale’s 20 hectare site as a selling point.

Established in 1961, the plants at Willowvale and Deven will struggle to attract big buyers, having seen no major retooling in recent years. A buyer would need to entirely rebuild the plant.

In an economy without motor vehicle credit, and where the number of people in formal work continues to shrink, demand for new cars is rock-bottom and IDC is unlikely to attract many prospective investors.

With its local assembly industry down, Zimbabwe has spent more than US$4 billion on vehicle imports since dollarisation in 2009.

At Willowvale, 18 000 vehicles rolled off the assembly line in 1997. By 2012, only 4 000 units were assembled. Willowvale assembled just 400 cars in 2017 and expected to make 500 more in 2018 after commissioning the BAIC line.

In a bid to boost demand and lift the motor assembly companies, Finance Minister Mthuli wants government to source cars from local assemblers.

For years, government ignored its own rule on car procurement; Cabinet Circular number 16 of 2011 requires that government buys 80% of its cars locally. It reinforced a 2002 Presidential Order to Government for local car procurement. This has never been complied with.

[Click here to read our special report into the destruction of Zimbabwe’s car assembly industry]

A 2016 study by the Transport and Infrastructure Parliamentary Portfolio Committee found that if Government alone bought cars and buses from local car assemblers, productivity there would increase by 10 percent. Instead, car assembly plants are lying idle.

At Quest Motors, the company has had to cut back on operations – cutting staff to just 100 from a peak of 6,000 – due to poor sales to government, its major customer.

The IDC sale is part of government’s slow privatisation programme, from which Ncube hopes to raise US$350 million by selling state-owned enterprises. Under the plan, Ncube plans to turn IDC, with interests ranging from cars to fertiliser manufacture and property, into a development finance corporation. He has granted IDC $30 million as initial capital, while the company, free from US sanctions since 2016, is hoping to raise a further US$50 offshore.

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