Home Business Ethiopia: Assembler Launches Dual-Purpose Three-Wheeler

Ethiopia: Assembler Launches Dual-Purpose Three-Wheeler

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Horra Adama Automotive Assembly Arena (H4A), a local vehicle assembler, has launched a new three-wheel model dubbed Maxima Z with an engine capacity of 236cc. The new model can be used for dual-purpose operations such as transporting passengers or cargo.

Launched last week, the model is assembled at the plant located in Adama, Oromia Regional State. The plant has a capacity of assembling 70 to 80 Maxima Z three-wheel models a day. Boasting an engine capacity of 236cc, the new model allows the passenger seating to be converted to cargo.

The plant was inaugurated in May 2018 with an investment of 1.5 billion Br. It assembles the three-wheel Maxima Bajaj, the four-wheel Qute Bajaj and the three-wheel Cargo Maxima Bajaj. It has a capacity of assembling 25,000 to 30,000 four-wheel and three-wheel Bajajs a year. The plant, which rests on 50,000Sqm of land located close to Belay Ab Motors plant in Adama, created employment opportunities for 150 individuals.

The automotive firm operates under the umbrella of Horra Group, which was established in 2005 and exports coffee, provides logistical services and engages in the real estate business. It operates Horra Real Estate, which is expected to start selling housing units this coming January, and Ethio Gabana, a specialty coffee company.

The company imports spare parts from India. A year and a half ago, it signed a memorandum of understanding (MoU) with Horizon Addis Tyre S.C., which was founded in 1972 as the first tyre production company in the country, to source the tyres.

“We’re waiting to receive an approval from our supplier to use the locally-sourced tyres,” Mintesinot Tezera, motor director at the company, told Fortune.

It plans to work in tandem with 250 dealers throughout the country to distribute its goods. The retail price tag for one Maxima Z model, whose engine operates on benzene, is set at 220,000 Br to 225,000 Br.

Before jumping into the assembly business, the company had been importing the three-wheel vehicles after signing a distribution agreement with Indian firm Bajaj Auto Ltd, the world’s largest manufacturer and exporter of three-wheeled vehicles, in February 2015.

While building the plant, the company secured 35pc of the total budget from banks, including Abyssinia, Hibret, Awash, Debub Global, the Cooperative Bank of Oromia, as a loan that is set to be fully repaid in three to seven years, according to Adem Kedir, CEO and founder of Horra Trading Plc.

In addition to the banks, government organisations were a big help in getting the project off the ground, according to Adem.

The Oromia Investment Commission facilitated a land grant for the plant, and the Ethiopian Customs Commission offered bonded warehouse and tax incentives for the import of body and spare parts. The Chemical & Construction Inputs Industry Development Institute and the Construction Works Regulatory Authority also assisted the project, according to Adem.

The new model has brought a great advantage for consumers in its combined passenger and cargo functionality, according to Tsegaye Teferi, an automotive engineering expert with 10 years of experience. He cited a lack of spare parts as a possible problem and running on benzene as a disadvantage when compared with other three-wheeler that operate on diesel, which has a lower price.

“The vehicle’s centre of gravity is higher, which is good for roads, but higher ground clearance could also lead to more accidents,” he added.

Most of the three-wheelers in the country have no more than a 205cc engine, and the 236cc [Maxima Z] engine is an upgrade. Still, it means that it will have higher fuel consumption and could be a disadvantage to the project, according to Tsegaye, who also teaches at Adama Science & Technology Institute.