Gearing up for luxury
Business was slow on Tuesday May 5 at Tefera Car Dealer, which is located off Cameroon Street, Bole sub-City. A 2010 Toyota Hilux D4D, a 2004 Toyota Yaris Compact, a 2015 Toyota Rav4, and a few other cars, which were mostly of Japanese-make, were on display.
A salesperson is idly playing a game—Candy Crush Saga—on his Samsung smartphone. His phone rings every few minutes and he would be forced to stop playing the game. Potential customers are the ones who usually call him during the day and that particular call was from a customer who wanted to know if there was a Toyota Vitz for sale. After answering the call, he goes back to playing the game on his phone.
Inside the office of the car dealership is a young secretary seated at her computer. She was—without a doubt—having a boring day. At least she looks like she is having one. The fact that the salesperson and the secretary are having a dreary day can be noticed from the overall ambience. In addition to that, not a single customer came that morning, according to the salesperson.
“It has never been like this,” Bereket Hailu, the salesperson, says adding that the competition these days is stiff, referring to the number of car dealerships that are now popping up all over the capital city. “Over the last couple of months, demand has been falling and the number of customers is declining.”
They sell used cars that are, by and large, imported from Dubai. And they are one of the many car dealerships in Addis Ababa who are trying to lure customers in an already saturated market.
The young salesperson says that he is confused over what the reason could be. “Sometimes buyers leave, saying that our prices are higher than what they had heard from others and the media,” he said.
Another dealership, Tsega Car Dealer, which is located off Ethio-China Street adjacent Future Talent Academy, has a different feel. There are relatively a larger number of cars and also antique cars including a six-cylinder 1970 Ford Galaxie 500 and a 1976 Mercedes-Benz W123.
Kibruyisfa Sintayehu, a salesperson at the dealership, says that though there is a decline in demand it has not been felt by all car importers and distributors.
“We have not experienced a problem, and we are doing business as usual,” he says.
According to Kibruyisfa, nowadays there are a new class of car buyers who are emerging in Addis in particular. He calls them “the young millionaires”.
“A brand-new 2015 Mercedes-Benz and a brand new 2015 Toyota Rav4 are currently selling like hot cakes among these people,” he says.
There are some who pay the full amount for the cars, which range from 1.8 million birr to 2.2 million birr depending on the mileage, and others who swap cars with extra cash as part of the deal.
“For instance, I brokered a deal that swapped a 2007 Toyota Rav4 with a 2015 Toyota Rav4. The deal was to pay 1.3 million birr together with the 2007 model, and the buyer would then acquire the 2015 model,” he says.
According to Kibruyisfa, the business of swapping is growing and he says that some car dealers rely heavily on people who exchange cars, rather than individuals who buy new cars. “Most of their customers already have cars, but want to swap them for more comfortable and modern cars, with improved fuel efficiency. For other customers it is a matter of lifestyle and class,” he says.
True to form, society is being divided into upper class, middle class and working class. This in turn entails distinguishable choices, priorities and preferences.
Some five years ago Toyota Vitz was the dominant car on the streets of Addis Ababa for the emerging middle class. The compact 1,000cc and 1,300cc car costs, at current market prices, from 230,000 birr to 260,000 birr, which saw close to a 52 percent increase from its price some five years ago. Now the middle class have joined the upper strata and the preference and trend seem to be changing and arguably the likes of the 2015 Toyota Rav4 and its German competitor – the stylish Mercedes-Benz – are bit by bit taking over the Vitz. As much as the emerging and indistinguishable Ethiopian middle classes fell in love with the Vitz model some five years ago, the poor, too, aspire to own one in the future. Regardless of income, Ethiopian urbanites seem to have established a relationship with the Vitz, the Rav4 and other new cars including the fancy ones.
This does not mean that the streets of Addis are jam-packed with these new fancy cars but they are becoming choices for customers and, according to Kibruyisfa, the demand is steadily rising.
“We in the business refer to the 2015 Mercedes-Benz as the new Vitz for the rich,” he says.
Interestingly, these new young millionaires do not buy their cars from the big dealers and agents like Moenco of Toyota, Orbis of Mercedes-Benz and Nyala of Nissan.
In fact, these big dealers of imported cars usually sell their vehicles to big buyers through auctions. And usually companies and government offices are their primary customers.
And this notion is shared by used car dealers who say that their situation is very different from the dealers of new cars.
“Their customers are organisations and big companies who usually request brand new cars in large numbers, while our customers are individuals with lesser financial capabilities who look for a used single car,” another sales agent, at Tsega Car Dealer, says.
And one of their customers is Deneke Getachew. He came to Tsega to swap his car, add some cash and get a newer car. He has visited no less than six car dealerships in town, wanting to sell his old-fashioned 1984 Toyota Corolla car and buy another more recent model. Until a few years ago, a 1984 model Toyota Corolla car in good condition sold for no more than 60,000 birr. However, in recent years it jumped up to a little over 100,000 birr and then started being sold for as much as 140,000 birr. Now the price is around 200,000 birr. Deneke wanted to negotiate the best price he could get for his car, which he has used for the last 12 years. Recently refurbished, the car is newly painted and has been upgraded with new spare parts installed.
“Unless I negotiate anywhere around 180,000 birr for this car, there is no way I can afford to buy a newer model car,” Deneke says.
Kibruyisfa and his colleague negotiated with Deneke and they came to some sort of an arrangement and an exhilarated Deneke left the compound after making appointments with the salespersons.
“I think that it is a good deal and he [Deneke] would not find a better deal anywhere,” Kibruyisfa concludes while declining to reveal the details of the deal.