After over seven years of importing vehicles to the local market, Marathon Motors Engineering Plc is to construct a commercial vehicle assembly plant in partnership with Hyundai Motor Manufacturing, in the outskirts of the city.
Marathon is expected to officially sign a deal with the South Korean giant, Hyundai, by the beginning of the week, on May 29, 2017 in the presence of executives from both sides. The project is likely to cost 400 million Br.
Located along Tulu Dimtu Road, Nefas Silk District, the plant will have an installed capacity to assemble between 2,000 and 2,500 automobiles every year. The company will add a value of 30pc on every car it produces.
The plant was originally planned to be built six years ago.
“It was delayed due to challenges in getting land from the city administration and technical issues at Hyundai,” said Melkamu Assefa, CEO of Marathon.
Marathon, which has been a sole importer of Hyundai since its establishment, obtained 30,000sqm of land to construct the plant from Addis Abeba City Administration three months ago.
“Hyundai EON and Grand i10 are among the models that will be assembled at the plant,” Melkamu added.
As a first step to erect the assembly, Marathon contracted GERETTA Consulting Architects and Engineering Plc for the designing work, which is already completed and awaiting an approval from Hyundai Motors. Previously GERETTA participated in the design and supervision of the Oromo Cultural Centre, Snap Plaza, the Burkina Faso Embassy and Zefmesh Grand Mall, among others.
The opening of the assembly is expected to save foreign exchange for the country which is dominated by used cars, accounting 80pc of total cars. In addition, it will reduce the price of Hyundai cars by an average of 16.5pc. Currently, the price of new Hyundai cars in the Ethiopian market ranges from 425,000 Br to 2.6 million Br.
Hyundai will be the second South Korean assembler partnered to open a plant in Ethiopia next to KIA Motors, which partnered with Belayab Motors Plc in September 2016. At that time, Belayab invested over 150 million Br in opening the plant, whose capacity is to assemble 3,000 KIA vehicles annually.
The move of Hyundai, whose first agreement in Africa was in South Africa, would enable it to establish a foothold in East Africa. Currently, it has the same pace in eight African countries.
Ethiopia produces about 8,000 commercial and other vehicles annually for the home market. Lifan Motors, Belayab Motors, and the Metals and Engineering Corporation (MetEC) are among 18 licensed assemblers in EthiThe plant, which is expected to be operational in less than a year, will create job opportunities for 300 individuals.
Founded seven years ago, Marathon sells more than 600 cars annually and up until last year, it leveraged sales of 1.8 billion Br since its establishment. Hyundai Motors and KIA Motors sold over eight million vehicles globally only in 2015.
Since its establishment, Marathon has constructed four modern facilities in various areas. A year ago, it constructed 120 million Br worth of advanced spares, sales and service centres in Hawassa and Addis Abeba.
Ever since the first car was brought a century ago to the country, the car market has been controlled by imported products, fulfilling over 90pc of the demand in the country. In 2009, the country imported 231 million dollars worth of vehicles. Last year, the amount surpassed a billion dollars.
Yet, the country’s motorisation rate is the lowest in the world, with six cars for 1,000 people. And car population has reached over 750,000, which is significantly low for a population of over 100 million.
Marathon’s effort to open a new assembly plant was announced a week after the first engine manufacturing plant, Mekelle Engine Production Factory, became operational with an investment capital of 350 million Br. The engine plant, a subsidiary of MetEC, can produce 20,000 engines every year.
Source : Fortune