The domino effect of increasing fuel prices is having a telling effect on the economy as the cost of almost all items, consumer and capital goods have gone up due to reliance on transport and logistics whose main cost driver is the price of fuel. Calls for an urgent solution from government to cushion its citizens are getting lauder.
The Car Dealers Association of Zambia has disclosed that the high fuel prices which are obtaining following two major increments in the last six to eight months have pushed the prices of used motor vehicles up because an increase in fuel price results in high landing costs for the vehicles.
Association Spokesperson Kelvin Kameta said fuel price increase impacts the business the same way a high exchange rate affects the car business, therefore they need to make price adjustments which are passed on to the buyers in order to realise a profit from the business
Speaking in an interview with the Zambian Business Times – ZBT, Kameta said lower fuel prices and a stable exchange rate help to keep the used car business stable adding that vehicles with bigger engine capacities have become even more difficult to sell when fuel prices are increased.
Kameta noted that when fuel prices go up and the price of landing a vehicle increases, consumers have to bare the cost because car dealers need to continue making a return or profit. There is shipping and landing costs from the port to the selling points, all these costs are affected by fuel prices.
He told ZBT that it is currently difficult to sell vehicles which run on petrol as most people are being discouraged by the high price of petrol adding that lately a lot of people are buying 1.5 litre engine cars such as the Toyota Allion with a few buying the Alphard and Hilux.
“We bring the vehicles from overseas, so what happens is that as fuel prices go up,the cost of landing a vehicle also goes up. If for example I am supposed to spend a K2,000 on fuel, then I will end up spending a K3,000 due to increased fuel prices, so I also have to recover that money and in the end, it is the end user or buyer who is affected”, he said.
“We used to sell a vehicle within a month but these days some cars which were brought into the country in December and January are still on the market. Some dealers have capital for one or two units, so when you have capital for one unit and it stays for three months it’s a loss because you will incurr other unforeseen expenses”,he said.
