How China is chipping into Japan’s vehicle market

Sinotruck

For the last 30 years, the Japanese have enjoyed dominance of East Africa’s vehicle market. There is a new player on the block, though, writes ALI TWAHA & MOSES TALEMWA.

With heavy assembly plants in Kenya and Tanzania, Nissan and Isuzu produced several buses, trailers, vans and tippers for the regional market.

Japanese trucks have dominated Uganda’s transport industry for years. But now, there is a new competitor on the block  In 2011, Pioneer Easy Bus services imported 100 Yutong buses from China to provide public transport around Kampala. The plan was to import a further 500 buses over the next three years.
The decision to import the buses was a subtle hint at a changing tide. Soon after, China’s Foton followed, with its trucks, cars and buses. Kalita Bus Company, which operates the Kampala-Fort Portal route, had used the Isuzu buses for years. Now Kalita has imported the Chinese-made Zhongtong
According to Abdurahman Ssebi, a manager at Kalita, the Zhongtong buses are cost-effective.
“Isuzu is a good bus but Zhongtong comes with high speed and less maintenance costs. It’s light and the fuel consumption is also low,” he said. He explained that on a one-way trip to Mbarara, the bus can save up to Shs 100,000 as compared to Isuzu, which consumes more. Kalita currently has eight new Zhongtong buses.
Kalita are not the only ones heading to China for a solution. Global Coaches have brought in four Chinese-made King-Long buses. Abdu Byabakama, a driver with Global Coaches, says the King-Long has impressed.
“King-Long is like Nissan but it is of a higher quality and its costs on maintenance are low,” says Byamukama.

ADDING VALUE
The local operators are going for Chinese brands since their Japanese competitors export engines and chassis, with the bodies designed in East Africa.
According to Placid Byabagambi, the owner of Kisiizi Shalom buses, “what you see as a bus arrives from Japan in boxes, and you have to find a firm in Kenya to build a body that fits … and sometimes it works out well.”
But the Chinese are not leaving anything to chance; they are exporting fully-built buses, with all the luxury trappings, at no extra cost to the importer, something many can’t resist. Trinity Express Limited operates the Kampala-Kigali route, in direct competition with Jaguar bus. Trinity currently has 14 Yutong coaches.
“The Yutong buses are good. At least our customers are not complaining,” said Conrad Rutareka, Trinity’s country manager. He added that “Scania buses are expensive [to acquire] compared to Yutong, which cost between Shs 300m and 450m. But [Scania] is a strong bus.”
This is in contrast to the average Isuzu bus which can cost up to Shs 600m or the Scania at Shs 750m before it hits the road.
Rutareka said they are “considering bringing in more Yutong buses in the future.”

SOME RELUCTANCE
Despite the changes, some transporters are sticking to the tried and proven brands. Byabagambi is considering bringing in two new Isuzu buses to replenish his aging four buses.
However, Global Coaches’ Leo Beyagira is still at odds. Company officials at Global Coaches say Beyagira was impressed by the performance of the King-Long buses and was considering bringing in four new ones this year, until he received a delegation from Isuzu East Africa.
“We cannot say for sure if the boss will yield to their request, but he assured them that the Isuzus were more expensive and slower than the King-Longs,” one of the officials there told us.
However, Perfect Coaches, who operate on the Kampala-Rukungiri route with a string of Isuzu buses, have also imported two King-Longs, “to see how they operate on our route,” according to an official there.
In the tipper industry, a series of mechanical problems and traffic accidents have seen some opting away from the Isuzu tippers for the Chinese Foton and Howo Sinotruck tippers, since they come brand new. One of the most prominent customers is Excel Construction, who brought in 12 new trucks to help with heavy construction works at Makerere University.

EAST AFRICAN HOLD
The Chinese may have arrived in Uganda but they are coming at a time when they are already making great progress in Kenya and Tanzania.
Foton entered the Kenyan market in 2011, importing fully-built motor vehicles, including trucks, vans, buses and pickups. With a toe-hold in the market, Foton moved to set up a local assembly plant since Kenya’s tax regulations allow for an incentive on imports of completely-knocked-down units headed for local assembly plants. The incentives include a 25 per cent import duty charged on imports of fully-built vehicles.
Foton contracted Thika-based Kenya Vehicle Manufacturers to assemble its brand of vehicles. However, the two companies fell out in 2014, forcing Foton to start running a smaller assembly operation at its Mlolongo plant.

Foton has penetrated the market by pricing its products lower than the competition, a hallmark of Chinese businesses. In Tanzania, both Foton and Yutong have put up assembly plants for buses and trucks in Dar es Salaam. 
This article was first published in The Observer Newspaper

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