Aidrous Bazaraa: “We are preparing for the post- joining WTO era in more than one way” [Archives:2007/1105/Business & Economy]

November 22 2007

Toyota is one of the most successful brands in the country, having established themselves over half a century ago as a synonymous with quality and reliability. With the changing consumer demands and market economics Toyota is transforming itself in terms of product range and marketing techniques in order to cope up with these changes. In this Interview, the Managing Director of the Automotive Machinery and Trade Center Mr. Aidrous Bazaraa talks to YemenTimes about their strategy for the upcoming period.

YT: Kindly brief us on the history of the Automotive Machinery and Trade Center and Toyota in Yemen.

AB: Since the 1950s, the founder of the Automotive Machinery and Trade Center Hajj Abu Baker Omar BaZaraa started working in the Automotive Industry. He first started importing American vehicles, and also the Czech Skoda vehicles. By 1956 we imported the first Toyota which was a Land Cruiser, and the founding of the Automotive Machinery and Trade Center (AMTC) as the sole agent of Toyota in Yemen, and the start of Toyota's success story in Yemen. In 1970 and upon the establishment of the Socialist system in the south of Yemen which banned privet sector activity, AMTC shifted its operations to the Northern Part of the country and established its headquarters in Sana'a. Up until the bless unification of 1990 and the collapse of the socialist system, our operations have expanded to reach the whole of Yemen.

YT: Toyota vehicles are the market leaders in Yemen, what is the competitive advantage you attribute this leadership to?

AB: Toyota's competitive advantage lies in the fact that it has endurance and quality of build. Toyota vehicles have been tested through the fifties and sixties in all terrains and can handle difficult driving conditions, in addition to the availability of after-sale service which has established confidence in the Toyota brand. Toyota today ranks as the Number One brand in terms of quality and reliability and customer satisfaction, not only in Yemen but also in the whole world.

YT: DO you see a change in market dynamics and a more stiff competition with other brands, models, and promotions by agents of other vehicles in Yemen?

AB: The truth is that Yemeni customers are more aware about the advantages and disadvantages of any brand, including Toyota. The prime asset Toyota has is the fact that buying a Toyota is a safe investment in terms of reliability, available of after-sale service, and the value in the second-hand car market. Toyota vehicles also have the advantage of technological and design superiority, which makes it the country's favored car in all segments.

YT: You innovated a new marketing retail strategy through the adoption of certified distributors. How viable is this strategy and are the price differences between you and your agents are sustainable?

AB: The Strategy to use distributed isn't a new invention and has proved successful in other places, and our experience with our retailers and distributors is a very pleasing and a successful example of marketing, as we have achieved record sales and wide market coverage. In terms of pricing, distributors have a pricing advantage in order to help them compete at a profitable margin for them.

YT: There are importers who claim that buying and importing new cars from neighboring countries is significantly cheaper that buying the new cars from you or your distributors. How do you comment on this claim?

AB: This is a very important point. It might be true that the prices of some showrooms and car importers from neighboring countries lower than our prices, that is due to government policy where customs charge different rates for people who import their personal cars, compared to the higher rate they charge us as a commercial establishment. The advantages these people get include Sales Tax and Value-added Tax exemptions, and these persons also don't pay corporate and income tax from their operations.

The other thing is that many intermediaries are taking advantage of these exemptions and end up competing with vehicle agents such as ourselves, this is a violation of the trade law in place and costs the government considerable amounts in forfeited revenue. The other thing is that such cars might mortgaged cars in their home countries and are sold illegally to Yemeni customers, examples include vehicles which are bought in installments and are – legally speaking – the property of banks and other companies, and brought into the country illegally. Such issues do not only affect the credibility of the system in place but also affect the country's balance of payment, through buying cars from intermediaries, not their original sources.

YT: Is there an impact from the used cars imported from neighboring countries or from the United States affecting your operations, including after-sale service?

AB: The used car market in Yemen is a large one in the region, and most used cars entering the country are either junk vehicles which outlived their life spans or are sold to the country as recyclable goods. there is a huge negative impact of importing used cars, not only in terms of affecting the economy but also in terms of environmental consequences and passenger safety.

YT: We know that uncertified and varying types of spare parts available within the local market. Do you have a strategy where you raise awareness on the importance of buying genuine spare parts?

AB: This is another problem affecting many countries, where poor quality of spare parts affect vehicle performance and will require routine replacement. such spare parts do not necessarily be less expensive that original spare parts, but will surely be another burden on the car's owner. We have launched an awareness campaign in order to educate our customers of the importance of buying certified spare parts, especially for critical parts such as the gearbox, engine parts, and the break pads.

YT: The disappearance of models such as the Camry and the Rav-4 from your product portfolio due to the non-availability of unleaded fuel. Is this affecting your sales and the relationship between Toyota and its customers in Yemen?

AB: For over five years we've been working with relevant government agencies in order to provide the unleaded fuel, this isn't the demand of Toyota only but it is an environmental and human welfare demand, as the fuel available in Yemen which includes lead affects the health of humans and other living creatures, and was proven to be a health hazard. With regards to our product line, it is true that the absence of Camry and Rav-4 models will affect our operations, but we hope that the government of Yemen will expand the distribution of unleaded fuel at the soonest possible. as this is the future direction and a critical issue for the environment.

YT: How would Yemen's accession to the WTO affect your operations as a sole agent in Yemen?

AB: We have started preparing for the Post-jointing WTO era in more than one way, but i must emphasize that large corporations are here to stay especially since we have the ability to provide a complete package in terms of after-sale services, and have a sell-and-run scenario.

YT: What are your future expansion plans in the country?

AB: AMTC has now become a parent company for a number of corporations, including the Arab Iron and Steel Company. We also have considerable investments in the banking sector, and we have ambitious expansion plans for the future.