Ethiopia has one of the lowest motorization rates in the world with only 1 million fleets for a population of 100 Million. Despite the low motorization rate, the number of vehicles imported during the past decade have been very impressive with the import number growing rapidly over the years. During the period 2010 to 2017, Ethiopia imported 800,000 passenger and commercial vehicles nearly doubling the total fleet size. Used passenger vehicles with Toyota brand dominate the automotive market. Each year 8,000 used Toyota and another 2,500 new Toyota cars are imported every year.
Ethiopia
Summary
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The current auto market is highly dominated by the Japanese Toyota brand. Large number of private auto dealers also import used passenger automobiles mainly from Europe and UAE again with Toyota brand dominating the market. The Motor and Engineering Company of Ethiopia LTD (MOENCO) is the official exclusive local representative of Toyota. However, several small car dealers import used Toyota cars mainly from Gulf countries and Europe and distribute in Ethiopia. Ethiopia’s automotive market is dominated by second-hand imported vehicles – particularly commercial vehicles. Commercial vehicles were Ethiopia’s second most valuable import overall in 2015, worth US$875 million. On the other hand, commercial vehicles were also Ethiopia’s highest earning automotive export in same year.
Current Trends & Demand
Automobiles business in Ethiopia is hugely affected by high tariff rates levied by the Ethiopian Revenue and Customs Authority (ERCA). Revenue generation rather than protection is the aim of the high duty. Duties on automobile are set based on vehicles horse power with the vehicles horse power increase, the duty amount increases. Some automobiles are liable for a duty as high as 200% of the CIF price. Heavy duties levied on automobiles are a major trading barrier for automotive business in Ethiopia. Diplomats and selected investment projects are allowed duty free import of automobiles.
Market Entry & Barriers
Teddy Tefera
U.S. Embassy Addis Ababa, Ehiopia
Current demand for passenger automobiles is estimated at over 20,000 vehicles a year with medium and large vehicles estimated at about 3000 a year.