Pupkewitz looks to grey import market

Pupkewitz Motors says the grey imports that have flooded the country’s roads, mainly from Japan, do not directly impact on its business, but in fact presents a business opportunity for the car dealer, through the parts and servicing business segment.
In previous years, car dealers are reported to have lobbied government to ban the importation of the second-hand cars, citing their impact on their new car sales and safety concerns, but Pupkewitz Motoring Division Head, Ekkerd van Wyk, said they had not joined that chorus.
“We don’t talk to government at all regarding grey imports. We do not participate in that market segment,” Van Wyk told the Windhoek Observer.
He, however, said the company is investigating the possibility of participating in the grey import market through servicing and the sale of vehicle parts.
“As we speak, there is an opportunity to be involved in the aftermarket sales of grey imported vehicles, particular with parts and service. I firmly believe there is opportunity that makes sense, we will get involved, but we can’t get the reputation of Pupkewitz on something that is not sustainable,” he said.
Asked if the company had started investigating the possibility of investing in a workshop, Van Wyk said no commitments had been made on the plans.
“If we are going to get involved with grey imports, it will definitely be after we are 100 percent certain we can keep your vehicle on the road, otherwise we are going to let you down, putting our reputation at risk. It’s part of our five year strategy to look at various opportunities available in the sector,” he said.
“It’s difficult just to get on the bandwagon of grey imports not knowing where the parts will come from.  There is no way I can open a workshop in Namibia not knowing where the parts are going to come from. It’s also important that I get access to the parts.”
Van Wyk said the car dealer, with franchise agreements with Nissan, Honda, GWM, Toyota and VW for Namibia, will also be making a foray into the pre-owned car business.
“We really want to focus on the pre-owned vehicles in Namibia because we think there is an opportunity, considering the downturn in the economy. We truly believe there exist an opportunity to expand our footprint in Namibia through pre-owned vehicles,” he said.
“As a reputable company, we cannot afford to sell a vehicle to a customer and not be able to give them the necessary backup service. The reason for focusing on South African imported vehicles is that they have readily available spares and backup.”
He said plans by government to cut its purchases of vehicle as part of its austerity measures and the slowdown in the local economy, was already being felt, but he remained optimistic that individual consumers will sustain the business.
“We saw last month a decline in Toyota sales and various other models also, so definitely the slowdown in the economy will have an impact on the business, but remember there are a lot of people out there on the road who are still under a service plan or a warranty,” Van Wyk said.
“The car park out there is huge, it is still substantial. As far as I know government granted a budget allocation of N$480 million for car purchases, I am not saying government will not buy, but I doubt if it will spend the allocated budget due to the fact that money is now quite scarce.
“Government will impact on our vehicle purchases, but looking at transport, it’s common knowledge that Namibians depend a lot on transport and thus people will still need to buy a vehicle, it might not be a new vehicle, but there is need.”
He said the revision of the Credit Agreements Act was not only impacting on the sector, but other sectors as well, including retail that offers goods and services on credit.
“Obviously it will have an influence, but we do not finance vehicles, that is the job for the banks. The fact that the financing schemes have changed, does not change our business. Of course we need some discipline in the market, people must buy what they can afford, but that’s the job for the banks,” the Pupkewitz Motors head said.
He said the introduction of the CO2 emissions tax on new passenger motor cars this year had a marginal impact on the company business, with Toyota South Africa having opted to take up the tab for its brand vehicles sold locally.
“On the CO2 taxes for Toyota:  it’s not as severe as we thought it would be. Toyota South Africa and Namibia would cost exactly the same, with no price difference after the company offered to cover the costs of the tax. The taxes are still paid, but it’s just that Toyota South Africa decided that Toyota cars in South Africa and Namibia must cost the same, with no price difference, that’s the reason they are subsidizing the CO2 taxes,” Van Wyk said.
“On the other models, the price increase due to the tax was marginal, around N$2000 on average. In principle, they have actually lowered the prices of their cars in Namibia than what they used to be.”
This comes as it emerged local car prices have increased by about eight percent since January, a move attributed to a weak local currency.
“We have seen an increase of eight percent already for 2016 due to the decline of the Namibia dollar against the United States dollar. If things continue the way they are, we might see another four percent increase this year, a combined increase of about 12 percent eventually,” Van Wyk said.
Pupkewitz Motors, a unit of the Pupkewitz Group, operates 14 car dealerships across the country, employing 550 employees.
According to industry data, Namibia currently sells 1500 units of new vehicles per month, from a peak of 2000 vehicles in prior year.