Zambia’s only authorised distributor of Mercedes Benz, Chrysler/Jeep, GWM, Mitsubishi and Fuso cars and trucks, Southern Cross Motors Ltd brings some of the world’s most foremost vehicles to the Zambia’s forecourts
By focusing on excellence in both pre and post-sales customer service, as well as investing heavily in its workshops and equipment, the company has built up an enviable reputation for its comprehensive auto services. In an exclusive interview with Globus Vision, Rudi Botha, General Manager of Southern Cross Motors Ltd, and Sales Manager Mike Ng’uni provide an outline of the company’s performance, its understanding of customers’ needs, and the automobile market in Zambia today.
What have been the key factors behind Zambia’s positive momentum?
Rudi Botha: We have seen growth in natural resources; particularly, in the Copperbelt. I think this has been fuelling the optimism in the country. In fact, it has become a sort of trendsetter.
In the automotive industry, we have seen an increased demand for commercial vehicles. It began to rise last year, and it continues to grow gradually this year. We all know that an increased demand in commercial vehicles is a good indicator.
That is what I am seeing at the moment.
Kindly give us an overview of Southern Cross Motors (SCM), Ltd. What makes SCM unique in the industry?
Rudi Botha: SCM began as Marunouchi Motors (MM), Ltd. in Chingola during the 1970s. Their initial target was the mines in Chingola. Three investors pooled their resources together to bring in commercial vehicles for mining operations. Over time, Mitsubishi Motors saw the value of what these people are doing, and began buying into their idea. That is when the company began to expand.
Mike Ng’uni: There was a time when the company assembled L200 pickups in conjunction with Ford Zambia. That eventually came to an end. By 2000, all the original investors have been bought off by Mitsubishi.
There used to be a company dedicated to distributing Mitsubishi vehicles while another company held the Mercedes franchise. The latter's interest shifted by 2002, leaving MM to take over the Mercedes franchise. It was a natural progression. Eventually, they handled the Chrysler Jeeps and Dodge vehicles. From then on, the company took on several other related products.
Rudi Botha: SCM has a wealth of experience under its belt. Today, it is the sole franchise holder of Mitsubishi vehicles in Zambia. It also offers Dodge Nitro, Jeep, Chrysler, and other high profile brands.
What makes SCM stand out from the rest?
Mike Ng’uni: Apart from our attention to quality and our well-trained staff, one of the company’s strongest points is the fact that it does not sell vehicles – it sells solutions. We make it a point to understand our customers’ needs. From there, we find the perfect solution for them.
SCM is indeed known for its highly skilled personnel. It has invested a lot in the area of training and skills development. Can you tell us a bit about your current programs?
Rudi Botha: It is a very dynamic industry. The guys who come in bring in the latest technologies.
The way we do it is we ask the trainer to come here instead of sending our staff over. It costs us a bit more to do it that way, but it allows us to train a broader base of technicians. We have a training room here. We have facilities for hands-on training sessions in the mornings. They would then have a recap in the classroom by the end of the day.
On the Mitsubishi side, we bring trainers in from Dubai. There is a skills training establishment in Dubai that looks after Mitsubishi products. The most recent visit was about a month ago.
On the side of Mercedes, we have regular visits from Denver. We have just had a visit. We are going to have another one next week. Through this, we have access to electronic skill-based training. Denver also sends out regular comprehensive bulletins on their vehicles, highlighting what should be fixed, how known problems should be repaired, and so on.
We also have very good training sessions for Chrysler. Every three to four months, their trainer from South Africa would come here to target specific areas. They would always ask us which particular areas we would like to cover. They would then bring in a trainer that is particularly skilled in the aspects we have requested. Last month, we had a workshop on DVD installations, electronics, and braking systems. The guy from Chrysler is coming back next week.
Mike Ng’uni: On the technicians’ end, it is a huge push forward. By the time they are finished with the program, they have substantially expanded their skill sets. That is because we have exposed them to the latest technologies, and made them aware of the trends in the industry. For technicians who have left the company to pursue other endeavours, it is a case of chalk and cheese. They are ahead of their colleagues in terms of their experience and skill levels.
Rudi Botha: Overall, we have a pretty good training and skills development program.
Having been put through such rigorous training makes your staff highly attractive to the competition. Can you comment on that?
Rudi Botha: We do, of course, face a challenge. Having trained people up to a certain level, they are then recruited by other companies. That is a minor downside. However, we continue training our people to be the best, because that is what our company needs. We allocate quite a lot of funds to training.
The company initially started in the Copperbelt. Eventually, it moved to Lusaka.
Mike Ng’uni: A few years ago, we made a strategic decision to have the outlet operate out of Kitwe. Before that, we had an outlet operating out of Chingola. Our Kitwe office mostly covers the northern part of the country, while our Lusaka office covers the southern part of the country. This would complement our vehicles when it comes to back-up services.
Does SCM have any short-term expansion plans?
Rudi Botha: Yes, as general manager, I do have expansion plans that the rest of the management team support. However, we still have to get shareholder approval.
I believe that there is an urgent need to look into the Livingstone area, where there is a high tourist population. They using a lot of our vehicles there, but we do not have the facilities down there. We are hoping to expand in that area in the short term.
With the Copperbelt moving towards the west, they would probably look into investing in Sioma Ngwezi. I have discussed that with the board and they are exploring the opportunities there.
We are looking to expand out after sales operations into those areas. I do not think that we are going to expand our sales at this stage. Then again, after sales do drive sales.
On that note, how would you value after sales in SCM?
Rudi Botha: We can cater to our customers in Lusaka, and the immediate area around it (100 kilometres around us). I think we are pretty much well covered. We are doing the same for Kitwe, but we definitely have a requirement to expand that into Livingstone and Sioma Ngwezi.
Good after sales drives good service, which would then drive sales. If you have good after sales, people will have the confidence to go and buy your product.
I have already been up to Sioma Ngwezi. As we speak, they are putting a team together to go to Livingstone next month. That is 500 kilometres from here, which is quite some distance. Zambia, as you know, is a vast country. We need to do that to offer the level of service that we need to offer. We want to put up a facility there where they can bring in their vehicles to have them serviced.
SCM handles a lot of high profile brands. Parts are usually hard to come by for these kinds of vehicles. How is SCM addressing this?
Mike Ng’uni: In terms of offering back-up parts and services for what we sell, we do not have problems. From our planning point of view (including our principles), all of these high profile brands have the responsibility to supply back-up materials for the products that they send us. We are adequately equipped in this regard. We can access parts with no problem.
As for services, each brand has a highly trained group of specialists to address the customer’s specific needs. We did mention our training program earlier. We invest a lot in that to ensure that we have the people to take care of these vehicles.
Distribution-wise, we are also doing very well.
In terms of distribution, what challenges have you encountered so far?
Mike Ng’uni: Zambia is a land-locked country, which poses some challenges. Sometimes, cargo has to pass through some of the neighbouring countries. It is a challenge, but a minor one. It is not insurmountable. Other than that, things are pretty smooth sailing.
The expansion of the Zambian middle class over the past two years has resulted in an increased demand for vehicles. How has this growth affected SCM?
Rudi Botha: We have seen an increase in the sales volume.
There has been a rise in the demand for reimported vehicles. The Minister of Transport is actively implementing measures to make sure that they pass the standards required for Zambia. Can you comment on this?
Rudi Botha: There is a very large body of reimported products coming from places like Japan, Singapore, and the UK (to a certain extent). Those vehicles are often bought privately. Individuals go to a website to purchase them. This sort of thing is not always ideal because when these vehicles arrive here, they are not compatible to the country's specific conditions (e.g., its climate, topographical structure, and other environmental factors). A lot of these reimported vehicles have brands or models that are not supported here. When they need to go through repairs (which they will, because they are not geared for the conditions we have here), owners will have a hard time getting it done. Quite a high percentage of those vehicles do not last that long in this country.
That is why it is wiser to go to companies like SCM. As Mike mentioned earlier, we have brands and models that are supported by the manufacturer. In terms of the brands that we support, we import a high proportion of the parts required. For parts that have yet to be acquired, it normally only takes two weeks to get (the general global industry standard).
How have these reimported vehicles affected companies like SCM?
Rudi Botha: As a motor dealer in Zambia, it is very unfortunate that the government allows for reimports to come in. It takes sales away from us, as dealers, the opportunity to put used cars in the market. That means people driving our product do not have the ability to come in and trade-in their vehicles for a new one. That is because the value of reimported vehicles is so much lower; they can never get their money back from that trading deal.
In most parts of the world, the used cars division contributes up to 35 per cent of the dealer’s profits. So there is a problem there from a dealer’s point of view.
On the other hand, it does pose as an advantage for people because these reimported vehicles are cheap enough for people to buy. By having their own, they have mobility. The country is still working on expanding its public transportation system (e.g., rehabilitating the existing rail system, installing an internal transport system, etc.)
However, we do hope that some controls would be established by the government in terms of the age of the reimported vehicles coming in, and the type of vehicle that they would allow. I think that it would go a long way to solving some of the problems that may arise from these reimported products.
Mike Ng’uni: I think the concern that most people in the motor industry have is that these reimported vehicles would take a percent of the market away from us. On top of which, we do have concerns about the quality of these reimported vehicles.
We have made some tangible investments in infrastructure. We have generated employment for the people and tax revenues for the government. It would probably work in the favour of the government in the long run if they established more stringent controls for reimported vehicles so that we can start building on the used car market. Even small-scale businesses can take off from this endeavour (the quality of which would be much controlled, and it would generate employment to further increase tax revenues). Right now, taxes applied to vehicles in this country are quite high. We cannot blame the government for doing it like that because the tax base is narrow. Allowing for spin-off businesses to start from the used vehicles market (as well as enabling current dealers to expand their used vehicles division) would make it much easier for the government to broaden its tax base.
Rudi Botha: Approximately 80 per cent of employment-aged people of this country are in the informal sector. Only 20 per cent of these age-appropriate workers are in the formal sector. That is one of the main reasons behind the government's narrow tax base.
Since I have been here, I have advocated a shared dialogue between the motor industry and the government. It is exactly what Mike is talking about. We can set it up like a community project and help people. It could be quite comfortable for the government, as well.
Speaking of community projects, how has SCM contributed to Zambia?
Mike Ng’uni: I think the contribution is huge. First off, we pay our taxes. Secondly, we employ people.
Rudi Botha: We have about 220 personnel. If you multiply that with an average of 8 people per family, that is 1,760 people.
Mike Ng’uni: We are also involved in a number of community projects. Just behind us here, we have been supporting the maternity wing and the children's wing of the Chawama Clinic for years. We have refurbished it, provided furniture, and offered whatever support our means would allow.
In terms of our core business, we have contributed to the development of the country. I think you have seen some of the old vehicles around the area. We are a part of that. We have contributed a great deal towards the transportation of goods and services. We have also contributed towards the development of infrastructure.
Rudi Botha: We also offer opportunities to peripheral businesses (e.g., suppliers of tires, upholstery, equipment, etc.). That is fairly far-reaching, I think.
According to Foreign Affairs and Tourism Minister Given Lubinda, the government is open to meaningful investments from individuals/entities overseas. Just last April, a delegation of German investors visited the country to explore opportunities. Last year, the Zambian Embassy in Germany held its very first Zambia-Germany Trade & Investment Conference in Berlin and Cologne. In your opinion, how can German investment contribute to the further expansion of the Zambian economy?
Rudi Botha: The Germans are well known for their ability in technology and organisation. Germany is a very efficient nation. I think that their visit to Zambia would enhance all of that. We are hungry for that. There is so much opportunity for us to grab on to those policies that they have set up. If you look at the international market, Germany is supporting Europe to a large extent right now. If they can just bring some of that to Zambia, the effects to us would be enormous.
Mike Ng’uni: Yes, it would definitely be far-reaching. Other than technology transfer, we can also benefit from their work ethics and business mentality.
Rudi Botha: We were certainly excited about the German delegation. Any sort of partnership fit that such a visit may bring can be good for the company and Zambia.
What final message would you like to leave to the readers of the Financial Times Deutschland?
Rudi Botha: Zambia is poised to move ahead very quickly. Any push that we can get from German investment would go a long way. When you think about it, Germans have always been at the forefront of development. I think this country is hungry for that. We are ready to embrace it. Enhancing the liaison between the two countries can only be hugely beneficial for Zambia.
Mike Ng’uni: Zambia offers very good investment opportunities. It is one of those few places where returns on investment are very good. They will not regret coming here. Expanding the Zambian-German relations is beneficial for both parties.
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