15 minute read
Winning
the Marathon
By Aklile Tsige Ethiopia’s automotive market is obviously dominated by second-hand imported vehicles – particularly commercial which were Ethiopia’s second most valuable import overall in 2019, worth US$955 million. On the other hand, commercial vehicles are also Ethiopia’s highest earning automotive export, according to various sources.
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History has it that Ethiopia saw the first locally assembled commercial vehicle by AMCE-IVECO. Following this path, according to a recent data from the Ministry of Trade and Industry, nearly 20 car assembly firms are operating across the country.
Founded in 2009, the Marathon Motor Engineering, Plc. is one of the vehicle assemblersin Ethiopia, 100% founded and owned by Ethiopians, an indigenous Auto company.
Since establishment the company has been headed by Melkamu Assefa, Founder, CEO and Managing Director,Proud Ethiopian, Married to Tigist Getachewand father of three children. Melkamu has got an extensive educational and professional experiences in the automotive industry, received his 1st Degree (BA) in Business Management – Addis Ababa University, MBA from Leicester University, UK; he’s certified from a Japanese Automotive professional firm.
Melkamu has also served in the renowned automotive company, MOENCO in Ethiopia for over 14 years. Furthermore, he has received different trainings and participated in high level convention and international conferences in more than 100 countries.ABN Editor-in-Chief Aklile Tsige speaks to Melkamu Assefa on the company’s ten plus journey and future plan.
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Melkamu Assefa
Founder, CEO and Managing Director
Humble Beginning
All began when the renowned world athletics icon Haile Gebreselassie and the current Marathon Motor and Engineering /MME/ founder, CEO and Managing Director, Melkamu Assefa met and discussed the idea of working together on automotive industry in September 2008. That was a very difficult moment to embark on such a business as there was severe scarcity of foreign currency at home due to the then global economic crisis.
However, it was also time that our athletics hero Haile Gebreselassie achieved a mind-blogging win in Berlin; he became the first human being in history to finish the 42 KM in less than two hours and four minutes, clocking
2:03:59.
Melkamu remembered that he couldn’t find a better name for their new venture than “Marathon”, which could sum up their values, ambitions and goals. Thus, the company was named after this remarkable and historical name. Marathon Motor Engineering plc. has linked with the famous international automotive brand called Hyundai; and so is Haile Gebresilassie. Hyundai is an extremely dynamic, achievement-oriented and competitive; and so is Melkamu Assefa. It’s so smart to bring these three forces together to establish a valuable trend-setting company whose values align with that of Hyundai’s: constantly striving for enhancement in design, performance and systems.
Melkamu recalled that MME’s journey together to contribute to our nation has only begun with the vision of ''Aiming to be the Best Customer Centric Auto Retail and Assembler Company''. Hyundai’s slogan "New Thinking, New Possibilities" always pushes us towards availing innovative benefit to our esteemed customers and helps us earn their trust. Hence, it cooperates with Hyundai running the erected automobile assembly plant in Nifas SilkLafto, Addis Ababa, which had been inaugurated in February 2019.
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FACTS ON HYUNDAI
4th largest manufacturing of vehicles in the world. Operates the world’s largest.integrated automobile manufacturing facility in Ulsan. S Korea. In 1967 Hyundai exported 6 units of first model of Pony to Ecuador in exchange for banana. Hyundai is the fastest auto maker company to achieve 100 million units. In 1986 it launched its excel compact Cars in the USA. Current design philosophy is known as “fluidic sculpture” inspired by nature.
“The main success of MME is not financial strength but high level of professionalism, the trust and confidence of our customers in Hyundai and our company. Being open minded and outward looking with always "Can Do Attitude" is our life journey. In addition, Haile, whose courage and all –time winning spirit gives me the determination and full time commitment” Reiterated Melkamu.“ “Our invisible and very satisfying achievement is the job we are doing for humanity and dignity-the corporate social responsibility we have tried to manage. The more we stretch our hands the more prosperous we would be. That’s what we believe.”
Starting its race with ten million birr capital, few office equipment and small room 11 years ago, it seemed very difficult to compete with other similar Auto firms with considerable and massive financial and logistics capacity. Nonetheless, MME has unexpectedly managed to become a leading and preferable assembler in the country. This, in deed, attributes to its customer-oriented, auto repair and far-sighted vision.
“We have built confidence in bringing dead and forgotten Hyundai vehicles to life. I could say we have established car clinic, making
them to appear in public.” Said Melkamu, adding that the Korean brand Hyundai is currently the most contemporary and extraordinary automotive company that is believed to have created a platform for knowledge transfer from Korea to Ethiopia, and a revolution in the car market.
In order to maintain its marathon pace, MME has built the state-ofthe-art- Saris 3S facilities as per the new Graphic Design Standard Interface of Hyundai Motor Company which is well-equipped with technical training center, employee first aid room, modern canteen and much more.
According to Melkamu, Marathon Motor Engineering is committed to providing more possibilities to its esteemed customers as long as the nation’s regulatory and legal framework allows the company, stating that the company will trade-ins cars born for Ethiopia, supplied by and serviced by MME, leasing option for short-life projects, facilitate financial and credit schemes in partnership with banks, test drives and many more services.
In 2019 MME reset its vision to be a Trend-Setter Automotive company in East Africa. More importantly, in the next two and three years it plans to fully abandon gas driven vehicles and embark on assembling electric cars with varieties of model and size.
This typically Ethiopian car assembler has dealt with different corporate social responsibilities across the country. At the onset in 2011 MME managed to build up two mobile clinics at a cost of 20 million birr in order to help combat malaria and HIV/AIDS pandemics in rural parts of Ethiopia.
The company has also donated big van to support efforts in facilitating the construction of the Grand Ethiopian Renaissance Dam /GERD/ besides providing various financial and technical support to people in need, and alleviating some societal problems witnessed across the nation. MME has provided training for young interns of Universities & TVET’S is fundamental & it is always in top of our plan and set as our life journey. MME has been providing internship in its four well equipped technical Training centers for years & creating/offering job opportunities.
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Marathon Motors, Haile Gebreselassie, has assembled its first Hyundai electric car. And the long-distance legend presented the car as a gift to Prime Minister Abiy Ahmed.
The company, in support of the national Traffic/Safety awareness campaign, has sponsored a morning traffic radio show since 2013 on FM radio to create road and traffic safety awareness as well as to prevent damages and fatalities caused by traffic accidents. Furthermore, upon an inaugural ceremony of thestate-of-the-art Vehicle Assembly Factory Donated Hyundai H1 12-seat minibus for Addis Ababa City Administration Social Trust Fund to support street children in February2019.
Following Ethiopian Government’s call for COVID 19 pandemic preventive support, Marathon Motor Engineering, Haile &Alem International and Great Ethiopian Run has donated on one and half million Birr (Birr 1,500,000.00) on 27th March 2020. In line with similar mission MME along with Hyundai Motor Company donated 27,000 N95 high quality personal protective masks that were imported from the Republic of Korea.
“Our invisible and very satisfying achievement is the job we are doing for humanity and dignity-the corporate social responsibility we have tried to manage. The more we stretch our hands the more prosperous we would be. That’s what we
believe.” Melkamu noted.
Many people in Ethiopia view a career in auto sales as a job filled with long hours and the need to employ hard closing techniques. However, a career in auto sales can be very rewarding. According the CEO, MME provides consultancy service to people or companies who want to buy vehicles; they are required to put trust on the company whether they buy or not.
Those who are successful in auto sales understand that their success is not dependent upon the brand of car that they sell. Success is based upon their ability to build rapport with their customers. The days of fast-talking, hard-closing sales professionals is over and have been replaced by the need for professionalism, courtesy, and service.
Anyone assuming that a career in auto sales would be nothing more than a good way to practice closing skills will find little success and much frustration. Hence, it’s to be understood that an automotive company is not an automotive company if it is only running a showroom, but it needs to have the following three major components: sales of vehicles or mega show room, supply of spare parts and workshop/vehicle clinic. In this regard, MME is a modern company that fulfills all these required facilities, gearing towards ensuring customer satisfaction and trust.
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Car of the Future Electric Car
Well-known that the world embarks on combating global warming through various mechanisms, working on green development activities with focus on building green economy, so does Ethiopia.As of July 2020, Marathon Motor Engineering already started assembling the electric Hyundai Ioniq. Currently, Marathon Motor Engineering is assembling 14 models of cars with Hyundai brand which makes it the first of its kind in East Africa.
The car can be charged at home can travel 304 kilometers after fully charged. In addition, a 50 kilowatts portable charger can also charge the car fully in 30 minutes.“Although it was hard to convince people in promoting and introducing our first electric cars that the nation had not seen before, MME made attempts to clarify what needs to be done; we have explained that there is household charger just like the charger we use to recharge our cellphone.” Noted Melkamu.
Electric cars are becoming more main stream, and MME isunlikely alone in wondering whether an electric car is right for it. As the technology supporting electric cars (EVs) and batteries continue to improve, drawbacks such as high cost, limited range, performance issues, long charge time, and a dearth of charging stations are fading away.
Electric vehicles are an essential part of the UCS plan to cut the nation's oil use in half in twenty years. Instead of searching for a gasoline station with the cheapest prices, people can charge at home at a cheaper and much more predictable cost.
Really exciting times for Ethiopia.
Clean and renewable hydropower dominates Ethiopia’s energy generation mix, contributing around 90% of the installed generation capacity. The electricity tariffs are also very favorable, with residential tariffs at around $0.06/ kWh. Driving EVs in Africa is a whole lot cheaper than driving ICE, . A study by AfricanEV reveals just how good driving the Hyundai Ionic EV and several others can be in Ethiopia.
The Hyundai Ioniq has been well received in Europe and in other markets where it has been launched. A lot of pundits have been impressed with its efficiency. Bjorn Nyland gave the Ioniq a very glowing review. Another critically acclaimed EV is the Hyundai Kona, and to show that the transition to electro mobility is happening much faster than most people think.
“A single vehicle whose life time ranges from eight to ten years is likely to emit an estimated amount of two tons of carbon dioxide into the atmosphere. Thus, producing and using electric cars which have zero-emission can significantly contribute to the national efforts to combat environmental pollution and climate change.”
When the production of the car increases, Marathon Motors also aims to install charging stations across the country like gas stations. As MME CEO disclosed the company will recently launch a new electric model along with quick charging apparatus. However, he said this new technology demands the cooperation and integration of various stakeholders such as
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the Ministry of Transport, Ministry of Finance, Ministry of Revenue, Ethiopian Electric Utility or Service, Ethio telecom, land Administration Departments and other relevant organs.
Speaking of the hazards gas engines caused, Melkamu noted that electric cars are already proving to be cleaner than vehicles running on petrol. As the share of electricity from renewable sources is set to increase in the future, electric cars will become even less harmful for the environment.
A study released by Greening Ethiopia has recently disclosed that the capital Addis Ababa accommodates 4.89 million tons of carbon dioxide, out of which 1.38 million is from residential houses and 1.4 million is from road transport sector while the remaining amount of this toxic gas is emitted from waste products and the like, according to Melkamu.
He further illustrated that a single vehicle whose life time ranges from eight to ten years is likely to emit an estimated amount of two tons of carbon dioxide into the atmosphere. Thus, producing and using electric cars which have zero-emission can significantly contribute to the national efforts to combat environmental pollution and climate change.
Marathon Motor has invested half a billion birr on the assembly plant that has the capacity to assemble 10,000 cars per annum. In Ethiopia currently about half of the population of the country, around 50 million most of them in rural areas,do not have access to electricity. Major cities including the capital, Addis Ababa are also been experiencing power outage frequently.
With regard to human resources, MME believes that its advancement lies on the competence and proficiency of its employees. So the company is committed to enhancing human development through continuous in-house trainings and experience sharing opportunities.
Vehicle affordability is further locked up by prohibitively high vehicle taxes of sometimes more than 220% depending on engine
size. As taxes in Ethiopia are cumulative, excise tax is calculated on the customs duty, surtax is charged on top of the excise tax, and customs duty and final VAT is calculated once the surtax, excise tax and customs duty have been added. Imported vehicles may cost as much as three times the retail price of the vehicle outside of the country.
“MME has made splendid move in the automotive industry in Ethiopia, and now seems to be winning the marathon race as it envisions to produce every single component of vehicles locally at cottage industry level, creating job opportunities for many citizens.”
During the past decade, a number of leading international automotive companies have carried out market scoping exercises to assess the viability of Ethiopia as an assembly hub. However, due to the limited market size, largescale investments by these automotive firms have not yet materialized, according to sources at the Federal Investment Commission.
Due to Ethiopia’s tax system, which subjects vehicles to tax depending on their engine size rather than age or origin, it is often cheaper to import a second-hand vehicle with a smaller engine size than it is to assemble a vehicle locally, despite import taxes on these vehicles. Despite being home to the continent’s second largest population, the overall automotive market size remains small in the short to medium term for current and prospective assemblers and producers. However, Ethiopia’s strong government support for industrialization and the development of auxiliary industries coupled with a large cost competitive labor pool, and sizeable investments in infrastructure (both physical and economic) could position the country favorably for automotive manufacturing in the long term to service both the regional and domestic market with price
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competitive vehicles. To achieve this, clear definitions of local content need to be developed.
The country’s high tax rates on vehicles reduce the affordability of vehicles, especially given the low income of the population, and restrains the vehicle retail market. To address this, industry stakeholders should support the establishment of vehicle financing solutions, in order to encourage wider vehicle ownership. Taxes should be revised to also take the age of vehicles into account in order to provide incentives for locally produced vehicles, according to MME CEO.
Many strongly believe that government regulations, tax inconsistencies, production output, shortage of road access, and the lack of foreign currency, finance for the purchase of trucks and running an assembly plant are
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keeping the development level of the automobile industry low in comparison to other developing countries.
MME was considered as high tax payer right after 2years of its establishment. MME is a 12 years old young company, within the past 11 years it has been engaged and contributed to the overall socio-economic development of the nation. The company was awarded silver medalin 2011and Gold medal in 2012 from the Ministry of Revenues. Since the survival of any business depends on customer, the main purpose of every business should be satisfying its existing customers and attracting a new customer. In this regard, MME is striving to meet the needs of its customers who are mainly private businesses such as hotels, non-government organizations, private investors, hospitals, celebrities and higher educational institutions. According to Melkamu, the longterm plan is not to remain as the sole importer, distributor and assembler of Hyundai brand, butMarathon Motor Engineering aspires to become Africa’s largest car manufacturer through tariff protection and by increasing the number of assembling plants, coming up with uniquely Ethiopian engine car called Africar.
Over the past ten plus years of service delivery MME has made splendid move in the automotive industry in Ethiopia, and now seems to be winning the marathon race as itenvisions to produce every single component of vehicles locally at cottage industry level, creating job opportunities for many citizens.
