Saturday, September 23, 2023
BusinessDemand evaporates for banned Chinese VWs

Demand evaporates for banned Chinese VWs

Customer demand for imported Chinese-made Volkswagen electric vehicles has collapsed since Ethiopia’s recent government ban, yet dealers say they have been unable to significantly lower the inflated sticker prices for the now hard-to-sell cars.

The import ban came at Volkswagen’s request, according to officials at the Ministry of Transport and Logistics.

VW said the Chinese assembler had “no legal authorization” to produce the cars on Volkswagen’s behalf for Ethiopia’s market, and the ban was needed to protect VW’s intellectual property and stop unauthorized sale of their electric vehicle models in Ethiopia.

Currently, no Ethiopian automaker legally assembles Volkswagen electric cars in the country.

Dealers say demand for the electric cars has collapsed following the import ban, with prices skyrocketing over 100 percent in the past year.

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Many customers wanted to buy VW electric cars but are now hesitant due to the import ban, according to Diro Terefe, a salesman at Beysa car shop in Bole.

“It has tarnished the car’s image, though the ban has nothing to do with its quality,” said Diro. “I’m still selling for the same price but few are buying.”

Stalled demand and sky-high prices have left dealers and importers struggling to unload their stock, with many unsold VW electric cars reportedly gathering dust on lots. “I have 10 idling in stock,” said Diro.

The price has now plateaued at five million birr for the ID4 model and six million birr for the ID6 model.

Tefera Sisay, owner of Tefera car shop, another dealer in Bole Medhanialem neighborhood, said customers are now abandoning VW in favor of alternative electric cars like Toyota and Honda.

“Demand has almost evaporated, tying up the working capital we had invested to supply more vehicles to the market,” Tefera said.

Car broker Abel Tefere, with 10 years of experience, predicts prices will decline as the ban means low demand.

“Consumers’ confidence in the vehicle is now at a low point, a situation already driving down prices as those who own the cars struggle to sell,” Abel told The Reporter.

VW is currently in talks with Ethiopian authorities to start assembly in the country. It first expressed interest to assemble in Ethiopia three years ago but delayed due to issues over patent rights regulations and policy unpredictability.

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