Ethiopian Auto Industry Limitations

Introduction

When it comes to the Automobiles industry, the preference is not only in good looking and affordable vehicles and cars but also focus is on whether the vehicle can be capable of standing the test of time, has locally available and easily accessible spare parts as well as being roadworthy. This as highlighted by Lemma (2015) is one of the reasons why locally assembled cars are struggling to compete in the Ethiopian car market. According to the Ethiopian Investment Commission, since 1998, 73 domestic vehicle assembly investment projects as well as 31 foreign vehicle investment projects have been licensed. Naturally this should be able to boost the performance of the vehicles assemblies Industry within Ethiopia substantially, however recent studies highlight that while 104 companies are licensed for vehicle assemblies within the country, only 6 companies are operational while 4 are within the implementation stage (Lemma, 2015).

According to Nazret (2018) among the limitation facing vehicle assemblies’ industries within Ethiopia includes: inefficient support from the government in being able to set up assembly stations. As a result, most of the registered companies in Vehicle Assemblies within Ethiopia are still stuck within the implementation face of developing their companies. Lemma (2015) further highlights other limitations to include poor quality and lack of efficiency of locally assembled vehicles leading to consumers preferring second hand imported ones. Lack of adequate and available spare parts for these vehicles as well as favorable prices for second hand imported cars. The study aims to evaluate how these constraints and limitations can be countered for the further flourishing of the Vehicles Assembly Industry within Ethiopia.

Research Aims and Objectives

Research Aims

Despite the wide range of both local and foreign vehicle assembly companies having been licensed for practice within Ethiopia in the past two decades, only a small number of these company operate within the Ethiopian market. This research looks to evaluate various constraints and limitations that may be the cause of this predicament in a bid of developing a solution for the vehicle assemblies’ companies in Ethiopia.

Research Objectives

To be able to adequately achieve the aims of the research, its contents were further broken down into different objectives which include:

To Evaluate the constraints impacting the supply chain management of Vehicle Assembly companies within Ethiopia

To Evaluate the Limitations faced by the Supply Chain Management of Vehicle Assembly Companies within Ethiopia

To highlight the differences in the constraints and limitations faced by Domestic as well as foreign Vehicle Assembly Companies within Ethiopia

Research Questions

What are the constraints impacting the Supply Chain Management of Vehicle Assembly Companies within Ethiopia?

What are the Limitations faced by the Supply Chain Management of Vehicle Assembly Companies within Ethiopia?

What are the differences in the constraints and limitations faced by Domestic as well as foreign Vehicle Assembly Companies within Ethiopia?

Rationale of the Study

Despite the issuance of licenses for both foreign and local Vehicle Assembly industries within Ethiopia, the industry is still poor in its performance and contribution to the Ethiopian economy with reference to the expected targets set by economists. This is due to a wide range of problems and constraints that the vehicle assembly’s industry within Ethiopia faces. This study aims to intensively analyze these limitations and constraints and establish viable ways of being able to adequately enhance the performance of this industry and subsequently improve on the Ethiopian economy.

Literature Review

The vehicles and Automobiles industry is one of the larges industries in any economy across the globe. Whether it is a multinational company, manufacturers, distributors or Assemblies company, its role within the national economy is rich and one to be supported by the countries government for enhancing further economic growth. Despite the government of Ethiopia licensing Vehicle Assemblies industries and providing support to companies willing to participate in this industry, the sector within the country has been on a lag in terms of growth and contribution to the economy.

Reuters (2018) reports that Ethiopia manufacturing industry produces about 8000 commercial and other vehicles annually for its own market. In 2015 alone, the country imported another more than 38000 assembled cars, a more than 50% increase from the previous year indicating the populations growing need for cars. However due to a range of setbacks, limitations and constraints the Vehicles Assembly industry in Ethiopia has not grown much as it was expected. Lemma (2015), highlights that out of the 104 companies licensed by the government of Ethiopia to be able to carry out Vehicle Assemblies within the country only 6 are currently functional including: Yang Fan, Mesfin Industrial Engineering, Betret International Plc, Belay Ab Motors, Nigma Motors and Metal and Engineering Corporation (MeTEC) (). This is due to a range of constraints and limitations faced by these industries within the country including:

Constraints

One of the most significant constraint these industries face is lack of adequate support from the government. A wide range of the licensed companies have been unable to develop a company and even go past the implementation stage due to lack of enough finances required in the setting up of an Assemblies plant within the country. Failure to secure funds from the commercial banks within the country has further paralyzed the development of these companies which require 200000 dollars for a setting a warehouse and basic machinery (Kifle, 2018).

Limitations

Other than the constraints the industry also faces limitations such as quality assurance to their customers. Aklilu (2010) highlights a technician’s sentiment on the quality of locally assembled vehicles as ‘…most of the locally assembled cars fail to pass the competency tests of some of their body parts.’ Highlighting a glitch in their quality. Further he emphasizes these vehicles having faulty brakes and clutches as some of the quality issues that have led to lack of performance within the industry. Other limitations and hurdles that hold down the industry include lack of accessibility to spare parts apart from the Assemblers themselves who inflate the prices (Reuters, 2018). These limitation and constraints affect the supply chain management of both local as well as foreign company’s vehicle assembly industry in Ethiopia equally

Research Methodology

Introduction

The research methodology comprises a very crucial part that has a significant impact on the progress of a research investigation is the chapter of research methodology (Neuman, 2013). It fundamentally consists of the description of different tools and techniques that would be used in conducting a research investigation. This chapter can be used by the scholar as a control mechanism so as to regulate different processes and systems used in the study. In the following paragraphs, aspects such as research approach, data collection, data analysis, sampling, etc. have been discussed.

Research Technique

The research applies a qualitative research technique aimed at collecting relevant facts and information related to the various constraints and limitations that Vehicle Assemblers within Ethiopia face. The research therefore applies the research philosophy and approach of interpretivism and induction which is suitable for research studies supported with the collection of first-hand data (Lewis, 2015).

Target Population

The aim of the research is to evaluate the various constraints and limitations that Vehicle Assemblers within Ethiopia face leading to the lagging growth of the sector within the industry. As such the population of the research will mainly comprise Vehicle Assemblers across Ethiopia as well as vehicle technicians within the car competency inspection Department

Sampling

To be able to establish the range with which to sample one’s respondents a researcher must be aware of the extent and magnitude of the population with which he/she intends to carry out the study (Blakie, 2010). The research will employ random sampling in being able to collect primary data from Vehicle Assemblers and technicians within the car competency inspection Department. In this way only, the researcher gets to engage a wide variety of Assemblers at their own convenient time.

Research Method

In consideration to the quantitative nature of the research study seeking to evaluate constraints and limitations facing Vehicle Assemblers in Ethiopia Open ended interviews was selected as the most appropriate mode of data collection. This method will be the most effective for the scholar. This is mainly due to reason that the researcher can obtain a significant amount of data and information regarding the subject matter (Smith, 2015). Apart from this, the researcher will also depend on secondary sources as well.

Data Analysis

The analysis of the data collected in the research will take up the form of thematic analysis. According to Braun and Clarke (2006), thematic analysis is a qualitative research method of analysis that considers the identification, analyzing and reporting of patterns, themes, and connections available within raw data. Thematic analysis is appropriate due to the nature of data collected from these interviews being qualitative.

Ethical Considerations

Due to the research obtaining information from individuals and human beings, ethical practices and concerns arise as to the relevant courtesy afforded to the participants of the study. According to the Blaikie (2010) the ethical issues present include the practice of using human beings as test subjects and subjecting them to questioning and interrogation. In managing this, relevant permissions will be obtained as in the respective companies and institutions in which the study is scheduled to be carried out. The identities of the participants will be effectively kept private for the sake of maintaining the anonymity of individuals seeking to participate. Their opinions will therefore remain only with the researcher.

References

Blaikie, N. (2010) Designing Social Research (2ndedn).Cambridge: Polity

Lewis, S., 2015. Qualitative inquiry and research design: Choosing among five approaches. Health promotion practice. 16(4). pp.473-475.

Neuman, W.L., 2013. Social research methods: Qualitative and quantitative approaches. Pearson education.

Smith, J.A., 2015. Qualitative psychology: A practical guide to research methods. Sage.