PROGRAMME (BSPLT) PURCHASING, LOGISTICS AND TRANSPORT

COURSE FLEET MANAGEMENT

CODE CUPLT 408

YEAR 2014

GROUP ASSIGNMENT

NAME SURNAMEREG NUMBER

AGATHA ZVAREVASHE C1111178Z

FREDRICK ZINDOGA C108773K

THERESA ZUNGUMURO C1111804E

GODFREY TIZORA CO97795X

KELVIN T NJOVANA C1111404V

CHARLENE NTINI C1111773W

CLEVER TSARWE C1111682X

NATASHA NYAKODZWE C1010526Q

ANNAH NYANDORO C109336X

BLESSING SHAVA C1111447R

LIERY TIKI C1111575F

CATHRINE ZIMUNYA C1111210J

SHADAYA KUTENDA C1110878Y

GODWIN ZIVENGWA C108114T

CHARLES SITHOLE C1111410B

MICHO K MUPONDA C1111307P

DERECK PARADZA C1111707Z

JACOB WOYO C1111143L

TAWANDA TAGUTANADZO C1111181C

PHILLIP TSANGU C111O933H

SIWELAH MUNYARADZI C1110927B

PHILLIP SHAYA C1111257K

NGONIDZSHE MUTANGA C1111471S

NOMALANGA TODHLANA C1111782F

MAXWELL SAMHUNGU C1110902Z

KENNETH RUBETE C1111925L

OLIATH SIACHEMA C109204D

MISHECK SIYAMANYANGA C1110906D

SHECKMORE NDLOVU C1110980J

PANGANAI KASSIM C10994E

TAPIWA C SHEKEDE C1110896S

THEOBALD M SHUMBA C1111450V

TAFADZWA NDLOVU C1112149E

QUESTION: The ban of importation of second hand vehicles (vehicles more than five years old) by government is a good move. Discuss. (25)

Introduction

Inasmuch as Zimbabwe is blooming in most of the sectors of the economy such as tourism and

retail industry, however, most of its raw materials, work-in-progress and finished products are

being imported from countries like China (clothes and electrical gadgets), Japan (motor

vehicles), and South Africa (groceries). These imports are posing tragedy effects on the growth

of the economy and welfare of the Zimbabwean citizens. In this same perspective, the ban of

importation of 2nd hand vehicles by the government is a good move as it protects local industries,

and the environment at large.

Liquidity

Most of the cash is being channelled to outside countries towards the importation of 2nd hand

vehicles (above 5 years) thus leaving the country in a liquidity crunch. Commercially the country

is recording a relatively large number of money transfers in respond to cheap 2nd hand vehicles

from Japan thereby causing a liquidity crunch in the country. The move by the government

towards the ban of importation of 2nd hand vehicles (with 5years or more) is beneficial to

corporation or fleet haulage companies such as Unifrieght services. For every company in the

transport industry, vehicle financing and acquisition are the major functions to consider when

managing the fleet especially in terms of fuel, maintenance costs. Within fleet management

organizations, vehicle financing involve borrowing cash from financial institutions like banks.

As a result of the liquidity problems that the banks are experiencing, most fleet management

organisation has applauded the government of this move so as to keep money in circulation

hence fleet maintenance and management cannot be affected by lack of funds. Improper vehicle

financing has resulted in many fleet management organisations shut as a result of deficiencies in

their productivity and performance hence the move towards the ban of importation of 2nd hand

vehicles sets a security measure to protect local fleet companies from liquidity crunch.

Attract investors

For investors to enter a market, mainly it depends on government policies in each and every

sector of the economy. Banning of importation of 2nd hand vehicles (5 years and above) is of

greater importance to the development and growth of our Zimbabwean economy as it lures

potential investors operating in the motor industry. The availability of potential investors in

motor industry helps the government with taxes and employment creation for the betterment of

its citizens and also fleet management companies by efficient and durable fleet which can

increase productivity and performance. In support of the government move towards the ban of

importation of 2nd hand vehicles (5 years and more), car imports have a negative impact on the

Gross Domestic Product (GDP) of the country as it yields no production within the economy

thereby resulting in the collapse of the economy. Instead potential investors increase competitive

advantage of the Zimbabwean market and also increase the standards of living of the citizens.

This also helps the country to maintain its balance of payment.

In this context, investors would invest in the local market while distributing new affordable and

efficient vehicles. For example Toyota South Africa (Pty) Ltd sells their vehicles on premium

bases so as to meet customer needs. This would also help fleet operators as acquisition of

vehicles would be based on a win-win agreement by potential investors.

Protecting local industry

The ban of importation of 2nd hand vehicles (5 years and more) by the government is a good

move as it promote and protect local motor industries such as Willowvale Mazda Motor

Corporation and Quest Motor Corporation to name a few. Above listed companies are suffering

from cheap imports leaving them with low bargaining power and small market share which

basically cannot recoup their production expenses. The move by the government creates a

platform for local industry to be competitive and productive as attention will be on their side.

The welfare of Zimbabwean citizens is improved as a result of equitable standards of living. The

affirmation of the local industry creates jobs thus reducing the brain drain effect that the country

is suffering from. If the local industry is protected means that fleet management organisations are

now benefitting from local specialist in fleet management through total control, planning and

monitoring of fleets especially in vehicle replacement and disposal.

In 2011, President R.G .Mugabe gave a directive that all government institutions should buy

vehicles locally in order to support the Buy Zimbabwe initiative and also to support the local

industry hence reducing cash outflow. In a circular published in the government gazette of 11TH

October 2002, then secretary to the President and Cabinet, Charles Utete, declared,” It is hereby

notified that in terms of Section 20 of the Procurement Act Chapter (22:14) , the president has

given the following directions to State Procurement Board to conceive the nation’s scarce

foreign currency resources and promote development of domestic automotive industry and

provides support thereto at a time of considerable challenge for that industry.

Fuel efficiency

Since motor vehicles are manufactured in generations, latest technology in terms of fuel

efficiency will be within the latest vehicles. Therefore it is important for fleet managers to

acquire the latest, durable motor vehicles so as to have a greater conversion ratio (litre per

kilometre ratio). For example movement from petrol carburettor to fuel injection and from heater

system to direct injection and from direct injection to injector pump to common rail system and

the Teco system on Haulage tucks. The move by the government towards the ban of importation

of 2nd hand vehicles helps fleet management in improving its fleet efficiency and also to be

environmental conscious as this new advancement in technology reduces the amount of carbon

gases emitted into the atmosphere. Fleet management organisations also benefit from improved

fuel efficiency as it will be channelizing its resources towards its core functions. And also these

2nd hand vehicles (5 years and more) are much less fuel efficient, making them more expensive

for fleet management organisations to run. As a result of its inefficiency, their ban by the

government is a good move because so many companies are now seeing running a fleet of 2nd

hand vehicles as a cost to the organisation. This normally results in low productivity and poor

service provision hence no or little profit generated.

Anti-dumping

According to the National Trade Policy (2012-2016), government will capacitate and strengthen

the investigating authority for it to be able to establish the existence of unfair trade practices

caused by dumping and subsidies imports, with a view to initiating anti-dumping action as well

as instituting counterveiling measures such as Buy Zimbabwe initiative and rules of origin. As

recommended in the National Trade Policy, anti- dumping measure protects the environment in

terms of safety and health management.

The high rate of technological advancement in Asian countries like Japan resulted in the

dumping of old second hand and obsolete vehicles to developing countries of Africa like

Zimbabwe. In addition, these African countries do not have recycling plants which can allow

them to recycle these vehicles as a result many waste from these imported vehicles are lying

dormant along roads, garages, and homes and overloaded in car breakers premises hence the

government policy of banning the importation of these vehicles to a greater extent is a positive

move.

Air pollution

On the 24th of April 2014, Harare News expresses that the proliferation of 2nd hand vehicles in

Harare is a ticking environmental time bomb. Dollarization brought about financial stability in

many households, enabling the purchase of vehicles which were previously out of reach. While

making Harare more mobile, the problem is that 2nd hand vehicles (5 years and more) cause

much higher air pollution than new durable cars. The move by the government towards the ban

of importation of these vehicles is a good move as they have older, less efficient engines with

dated technology manufactured under less strict industry standards. The exponential increase of

these vehicles on the city’s streets has caused carbon dioxide emissions to rise. Not only do these

vehicles emit higher amounts of carbon dioxide, a green house gas that causes climate change,

but they also emit higher amounts of noxious gases like carbon monoxide, sulphur dioxide and

nitrogen oxides.

Furthermore, second hand vehicles results in hydrological system disruption whereby these

emissions will result in acidic rainfall which is harmful to the environment and agricultural

activities thereby hindering production output. These emissions has a great impact on the health

of the Zimbabwean citizens as TB, eyesight problems will accrue thus causing a weak labour

force for the country to run effectively so the move by the government is good as it protects its

citizens from such tragedy pollution.

Environmental protection

The move by the government towards the ban of importation of 2nd hand vehicles is well

confirmed to be a good move as it protects the environment thus the flora and fauna. Under fleet

management functions, fleet disposal is one of the greatest activities that need special attention

so as to keep the environment and all that is in it safe. As a fleet manager, it is vital to plan on

how best obsolete vehicles are disposed. Japan is selling these vehicles at a cheap, affordable

price that almost 30% of the Zimbabwean population has acquired these 2nd hand vehicles (5

years and above) which results in many of them being disposed because they lack proper service

and maintenance. And also it is costly to fetch for replacement parts from Japan hence many of

them remain idle or they are disposed.

Disposing of the associated metal, rubber and waste fluids is a huge environmental issue. There

are currently no proper treatment facilities in Harare that have the equipment required to recycle

what can be recovered and safely dispose of the many pollutants associated with 2nd hand

vehicles. Most vehicles end up in driveways, in scrap yards or in car breaker premises, leaching

heavy metals and toxins into the ground, or they rust by the side of the road where they have

been illegally abandoned. At the same time, tonnes of oil and brake fluid are poured down drains

in a city that depends on recycling its own water hence harm of the aquatic life and also to the

citizens as this water will be poorly treated.

On a more ominous side, there have been reports of vehicles that were contaminated by

radioactive fallout from the Fukushima nuclear disaster that occurred in Japan in 2011, being

exported to Africa and do not forget that Zimbabwe is in Africa. African policy specialist and

journalist, Chika Ezeanya, reported from Nigeria: ‘Cars having up to twenty times the

permissible level of radiation have found their way to African countries where several

governments are clueless or unconcerned about such health risks.’’ There is no inspection for

contamination at Zimbabwe’s borders and this leaves the general populace at the risk of

contracting different forms of cancer from the exposure to radiation.

Accidental risks.

In first world countries, most car owners do not usually maintain their vehicles because it is

costly and they require these vehicles as brand new. First world have vehicle policies which

prohibit the use of vehicles more than 5 years from the date of manufacturer on their roads for

example in Japan. So most of these cars are dumped into the African market, upon receipt of

these vehicles, car owners eventually use them without conducting a special service on them or

even changing the tyres which normally do not suit the Zimbabwean climate. Many cases of road

accidents are a result of lack of maintenance for example suspension failure like ball-joint

dislocation which can lead to vehicle overturning. Current technologies on vehicles have

contributed to reduction in number of road accidents. Latest vehicle have cell phone answering

mechanism such as Bluetooth whereby a driver a call using hands free compared to those old

vehicles. So the move by the government is vital as it reduces accidents frequency.

Road load tension

Road load tension refers to the amount of vehicles using or passing through a certain highway in

relation to quantity loaded. More roads of Zimbabwe are not that good hence increase in the flow

of vehicles passing through the road destroys the condition of roads. The greater number of cars

using a particular road, the greater, and the degree of deterioration of that road will be. For

example Harare-Masvingo-Beitbridge road is experiencing a heavy road load tension as a result

it records a largest number of potholes and dilapidations. It is costly for the government to

maintain and repair this road as the Group Five is charging $1million USD for the construction

of a kilometre. It’s more risky to drive a second hand bulk truck carrying the actual load as the

performance of the vehicle will not be really perfect for a horse to pull. However, Zimbabwe

depends on importation of products and these vehicles from outside, therefore since we do not

have local producer to replace them it will difficulty for transport operators to provide sufficient

services at lower cost. Also the government has to embark on dualisation of core highways

linking Harare with South Africa, Zambia, Botswana and Mozambique

However the move by the government towards the banning of 2nd hand vehicles (5 years and

more) is a predicament gorge to fall in as the Zimbabwean current situation shuns any

development or growth of an industry activity. As a result of economic hardships that the country

is facing, motor industries are operating below its expected capacity. The government’s revenue

base is being growing hence creating more jobs on the market so the ban of 2nd hand vehicles is

unacceptable.

Loss of revenue

The ban of the importation of 2nd hand vehicles by the government is not a good move as it leads

to loss of revenue that is generated from customs duty payment and surtax charged on 2nd hand

vehicles with 5 years and more. ZIMRA is now being viewed as the most efficient revenue

generating parastatal as it is collecting much revenue from vehicles imports especially on its

Beitbridge, Chirundu border post. This means that the government will lose revenue that is from

the duties and surtax paid on their entry. Vehicle Inspection Department (VID) also lose revenue

as the number of vehicles being registered will be reduced thereby dissatisfying their defined

objectives.

Lack of capacity

In Zimbabwe, Willowvale Mazda Motor Company is well known of assembling motor vehicles

but it is lacking production capacity and also it is offering its durable vehicles at a higher price

which is unaffordable to the greater populace of Zimbabwe. Its capacity has been reduced by

higher cost of production and also by the availability of cheap imports from Japan.

As a result of high growth in motor vehicle demand, motor industries are now lacking quality,

adequate service provision which can meet the daily fluctuating demand.

Conclusion

The ban of importation of 2nd hand vehicles (5 years and more) by the government is a good

move. For a country like Zimbabwe to develop it needs financial security, environmental

security, economic security and indigenisation of local industry for it to sustain its competitive

advantage on the world market.

References

Harare News, 24th April 2014

National Trade Policy, (2012-2016)