El Auto Engineering and Trading PLC

EL AUTO ENGINEERING AND TRADING PLC
COMPANY PROFILE
EL AUTO ASSEMBLING PLC
Cell phone: 0930033303
LEKA BUILDING
Along GORO
P.O. Box ----------
Addis Ababa, G.P.O.
Cell Phone: - 0933033302
Fax: +251--
Or
Email: ceo@elautoas.com; operationmanager@elautoas.com
1 | EALAUTO Engineering and Trading Plc Feasibility Study

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1. Executive Summary
The automotive industry is currently the fastest growing industry in Ethiopia.

In recognition of this fact, the objective of this company is to provide quality
automobiles and to continually improve customer service at competitive
supply chain and prices to best meet their needs.
The company has leased an assembly plant with the latest technologies in
Ethiopian manufacturing industry to ensure that our customers receive the
right service at the right time. Our management and technical staff are
dedicated to steer this company towards achieving these goals and we plan
to include in our bracket private companies and more so on government and
nongovernmental organizations as part of our clientele.
El Auto Assembling Plc has planned to undertake the manufacturing and
distribution of light to heavy duty vehicles on the whole Ethiopian transport
industry focusing in Oromia, Addis Ababa and to the whole of Ethiopia after
which the company aspires to reach out to the regional market of the Horn
of Africa. The business aims to provide latest technology in the transport
industry and just on time delivery through tenders and direct sales.
Currently El Auto Assembling Plc is manufacturing sedan automobiles which
are solely purposed to be utilized for the modern taxi purposes which are
compliant with the Transport Authority standard and also requirements of
the Ministry of Culture and Tourism. In the meantime, our sister company El
Taxi Trading Plc has adopted a mobile application called Taxiye which is
currently one of the most competent cab hailing platforms in the city.
While the ultimate goal of our company is to be the most competent car
manufacturing industry in the regional market of Horn of Africa, we also plan
to ensure the success of this vision by empowering local youth and training

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skilled work forces that can play a crucial role in the manufacturing of
vehicles.
Our Mission is to achieve the reputation of a quality, high standard & reliable
auto assembling firm and high-quality car importer to Ethiopia.
Our Vision is to achieve 100% customer satisfaction by delivering quality

products and services at an affordable cost. Our forward vision is to strive to
become an entity in car market and own our car manufacturing factory in
Ethiopia.
Our Values:
Quality,
Teamwork,
Innovation,
Transparency,
Responsibility,
Professionalism
Company Milestones
EL AUTO ASSEMBLING PLC began its business operation in 2018 and has
reached agreement with JAC MOTOR based in china to import 1000 SKD JAC
J4 to Ethiopia then assembly and pass to its customers.
In April 2019 an exclusive dealership agreement with singed between JAC

Motors and El Auto Assembling PLC.
In July 2019 a deal was reached between our financing partners, Awash
Bank S.C. to extend a letter of credit facility for import of vehicles and 70%
equity contribution of our customers..

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In August 2019 an order for the first batch of SKD cars was made. In the
same month, the company was able to pre-sell 250 cars, with each buyer
paying 10-30% in advance for the cars.
In October 2019 the first LC for 120 units of JAC J4 SKD cars was opened at
Awash Bank S.C. which arrived in January and February and has been
assembled and delivered to customers.
In December 2020 the second and third LC’s for 153 units of JAC J4 and 120
units of Chery QQ and 64 units of Chery Arrizo 3 was opened which has
already arrived in East Industry Zone and delivered to customer after
assembling.
In May 2020 the first 60 units of JAC J4 were manufactured and made ready
for license plate. In July 2020 the first 50 units of JAC J4 handed over to our
customers who have now commenced operation under the brand Taxiye.
Figure 1 The first 50 units delivered to 7 Star Plc by El Auto Assembling Plc.
Our Growth Plan
In October 2019 a sale agreement for first round 1000 cars was finalized and
next project for 2000 car will be signed with JAC MOTORS or other suppliers.
Over the next 3 years, our company plans to assemble and sell 10,000 cars

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in Ethiopia alone, all credit to the ever-expanding need for urban mobility,
and increased motorization of Ethiopia.
A significant portion of EL AUTO’s current demand comes from Taxi drivers

who also work with our ride hailing sister company Taxiye. Addis Ababa,
being the hub of African Nations with large number of international
diplomatic offices, a vast majority of international flights to Africa transits
through Addis Ababa which presents an elevated demand for modern taxi
cabs and taxi operation technologies.
Our initial offerings therefore are particularly tailor made for taxi operators
on Taxiye Platform. Our expansion however looks at a broader market
opportunity which has been made evident by the rising middle income class
willing to spend in order to own a car.

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Our start up approach and growth strategy is premised on two critical
factors.
1. A majority of Cabs (90%) operating in Ethiopia (15,000) are at least

20 years old. These cabs tend to be expensive to operate and maintain. We
as a company noticed that the need for fleet rejuvenation was evident and
that if a reliable supplier was to come offer to sell cabs to the cab operators,
there would be a significant niche that would justify an assembly plant.
2. As one of the least motorized countries in the world, there was

significant opportunity for an automotive assembly business. The Africa
average for 2015 was 44 cars per 1000 people. In Ethiopia it 2 cars per
1000 people. See below data from Delloite East Africa.
Figure 2 Africa Motorisation Rate 2015
Growth Strategy
We as a company have adopted a growth plan that is risk neutral but is also
opportunistic in the sense that whatever resources that we can leverage, we
use, the risk we can offset, we use that.
Proof of Concept (Market and Price Point)

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One of key decisions in that regard was to first establish proof of market
appetite. We also needed to establish appetite for the products and willingness
to pay. When we first placed the ad for our cars, we ensured that interested
buyers not only register for the cars but should also pay a nominal deposit. We
have over 2000 registered buyers from the capital alone and more are
registering with our regional (in country) sales offices.
Once we secured the bank loans, we asked the buyers to deposit 10% to 30%
of the total value of the car in a designated bank account. In the last three
months alone, 250 and growing number buyers have deposited the said
amount.
Infrastructure
The capex for the automotive assembly is usually very high. In our effort to
reduce our capex commitment early on, we have decided to utilize idle
capacity with existing assembly lines for as low as USD 500/per car.
We are also using the group company’s (El Nets) buying power and Taxiye’s
reach to the network of taxi operators in Ethiopia to push our sales efforts to
new heights. In that sense, sales operators in the two companies, sell each
other’s products with impressive result. Taxiye and El Auto have also ventured
into nationwide expansion which will serve as sales network across Ethiopia.
In the medium term, 12 months from now, we look to setup a fully fit CKD
assembly line which will serve the entire east African Market.

2. Company Background
General
El Auto Assembly PLC was established in accordance with the commercial
code of Ethiopia and article and memorandum of association signed between
the three shareholders. The company has been mainly engaged in
automobile car assembly. The shareholders had been engaged in business
separately and in association at different levels and structures of business
for many years before they decided to collaborate in this business together
in to one structure under the umbrella of the PLC.
For the assembly of the first 500 orders, the company has rented 9,800
square meters facility from Yangfan Motors PLC in Oromia regional state
eastern industrial zone around Dukem. Yangfan Motors Plc is previously
known with Lifan brand it used to assemble in Ethiopia.
By the end of year 202, we have already launched the automobile car
assembly factory in Addis Ababa and Eastern Industry Zone and develop our
own assembling and manufacturing plant to assemble various vehicle
products and brands.
Company’s Objectives, Motto, Vision and Mission
3. COMPANY OBJECTIVES
It is always the aim of El Auto Assembling PLC to become the key
stakeholders of the organization to bring success to both business local and
international market. It will create a permanent management system that
will provide employees with both physical and mental satisfaction. As the

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factory has planned to produce world class products, the plant will maintain
ISO 9001:2008 Quality Management System, all the processing system and
the quality automotive industry and assembled automobile car as per the
international standards of ISO and DIN.
According to the goals and objectives of the organization, the organization

has established itself and its staff in the new vision, management and skill
training, information technology, modern and global business practices, by
initiating its own administration, under-the-board and other subordinates,
business owners and even its customers. Without hesitation, we will make
every effort to ensure that our endeavor is in a position to prevail in the
world of competitive business. The organization is led by the same spirit,
across the board.
The fast growing per capita consumption of those product in the country,
and also in the capital city of Ethiopia, import full dependency those
products in the country, contributed in increasing demand for those product
users by governmental and non-governmental organization. As a result
there will be a gear demand for the project. This is why the shareholders of
the PLC decided to engage themself in such business. Specifically, the
project is established under the following objectives:
 Introducing new technology ensuring to produce quality and complete
set of electrical products to earn reasonable profit.
 Ensure customer satisfaction by providing standard products and
comprehensive services in one basket.
 Play self-role in the minimization of poverty, creating job opportunity
and building capacity & skill of professionals in the industry where the
company is engaged.
 Build continuously the culture of competitiveness and dominating the
competitors market by providing superior quality automobile car

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 To create job opportunity to the city populations
 To help the development activity in the surrounding communities
 As a back for other socio-economic development of the area
 To generate profit to the PLC and hence improve shareholders
economic status
 To substitute those imported cars
 To create additional income to the government revenue in the form of
tax (indirectly)
 Establishes modern supervisory system that reinforces its plans and
goals.
 Creates ideas that satisfy with new leadership and norms, and
systems that integrate modern IT systems with both regional and
international conditions.
 Will expanded workforce management systems to ensure that new
jobs will continue to be carried out by the traditional technology and
skilled man power.
Company Vision
To continue being competitive manufacturer locally and to be one of the
proffered industries at international level, manned by well trained and
motivated professionals, that is invariably the principal choice especially for
competitively priced, high volume, and acceptable quality product
requirements.
Company Mission
 Quality: producing quality standard assembled automobile car
 Value: We offer greater value to our users with long lives of the
product

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 Integrity: Our customers depend on the quality of our products. Our
commitment to the highest standard is the foundation of our
customers’ trust.
 Creating environmentally friendly manufacturing industry (Green
Manufacturing)
Major Facts for the Establishment of El Auto Automobile Car

Assembly Factory
Automotive sector plays a significant role in the economic growth of our

Country, as a source of jobs and capital investment, as a secure investment
for individual and family savings, and as an essential contributor to personal
happiness. So before making any investment decision, it is advisable to
evaluate the associated risk factors by taking into consideration certain key
elements. These may include availability of resources, service industry
knowledge, and specific managerial and technical skill set.
The development of a vibrant automotive industry is based on ample supply

of affordable land, with easy access to transportation and efficient
distribution of necessities such as energy and water. Financial institutions
are an important partner in this sector. To broaden the consumer base for
industry ownership, especially among automotive industry, banks and
financial institutions play a vital role.
Key Success factors/ Practical Tips for Success
Macro level Success Factors
 Abundant Labor Resource

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With a population of more than 1100 million, Ethiopia can provide sufficient
labor force with cost-competitiveness for the development of labor-intensive
manufacturing sector.
 Ethiopia’s labor law, which regulates worker-employer relations, is in
line with international conventions.
 With over 50 million workers, Ethiopia has the second largest labor
force in Africa (World Bank’s Doing Business Report, 2014).
 Ethiopia’s minimum wage is among the lowest in Africa, with only 5
countries – Burundi, Uganda, Egypt, Gambia and Malawi – having
lower minimum wages (International Labor Organization, 2010/11).
 Generally, private sector monthly salaries for university graduates
range from USD 150 to USD 200, while construction sector monthly
wages range from USD 60 for daily laborers to USD 300 for a foreman
(Source: Ethiopia’s Ministry of Urban Development and Construction).
 Support through Policy and Incentives
The government has been steadily pushing towards market-oriented reform

by means of developing the private sector, deregulating rigid control over
the economy, liberalizing foreign exchange, lowering tariff rate, etc.
 Customs duty payment exemption on capital goods and construction

materials, and on spare parts whose value is not greater than 15% of
the imported capital goods’ total value;
 Investors have the right to ask refund of customs duty paid on inputs
(raw materials and components) when buying capital goods or
construction materials from local manufacturing industries.

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 Income tax exemption of up to 6 years for manufacturing and agro-
processing, and of up to 9 years for agricultural investment. Additional
2-4 years income tax exemption for exporting investors located within
industrial parks and 10-15 years exemption for industrial park
developers;
 Carry forward of losses for half of the tax holiday period;
 Several export incentives, including the Duty Draw-Back, Voucher,
Bonded Factory and Manufacturing Warehouse, and Export Credit
Guarantee schemes.
 In addition, the government guarantees the remittance of profit,
dividends, principals and interest payments on external loans, and the
provision of land at competitive lease prices.
 Increased Domestic Demand
Ethiopia has a large territory with a large population. The growth rate of the
population is 2.6%, creating a large potential market. According to the
country economic development programme, the average growth rate of
Growth Domestic Product (GDP) is 8.9% in 2006, 10.6% in 2007 and 11.1%
in 2008. As a result of the development of the economy and the progress
made in reduction of poverty as well as the improvement of people living
standards, it is believed that not only the present market demand would
increase, but also a new market demand will be increased in the future.
 The country has registered a continuous economic growth for the past
ten consecutive years. It has registered an average GDP growth of
more than 10% per year for these periods indicating the smooth
running of the country's economy.

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 There is improvement in basic infrastructural facility (i.e. road
network, telecommunications and electricity facility) in the country.
 Existence of both governmental and private banks to avail credit to
diversified types of business.
 The country has cheap labor which results in low labor cost
Sector Level Success Factors
 Cheap labor force

 Availability of basic infrastructure
 Availability of market for the product
 Government’s special attention towards manufacturing sector
Strategic Recommendations of the Project Consultant
 The automotive industry is only profitable if the projects are completed

in time.
 Quality of assembled automobile car used ensures quality of output.
Superior quality is the best competitive advantage these days.
 Careful selection of production area counts towards selling price and
timely sales and delivery of vehicles.
Future Challenges and Risk Factors
Generally, this manufacturing industry faces a range of challenges in the

coming years if the policy and regulatory environment remains broadly
unchanged from its present form.
Inadequate Infrastructure: Transpiration facilities in from port to

producing areas especially at times of economic boom for that product raw
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material are the major problem. Most raw materials come from abroad
country so that it takes long time to transport material to the manufacturing
area at the right time.
The provision of supporting infrastructure is a key component to the

expansion of the automotive sector. However, the lack of provision of basic
infrastructure and services has impeded progress in certain neighborhoods
and held back the plans of developers who had acquired the sector.
Problems are also aggravated by the lack of advanced planning and
coordination between the / administration and infrastructure providers (e.g.
electricity/water suppliers), generating unnecessary costs and delays in the
manufacturing sector
Finance Availability: Lack of finance, particularly long-term finance, is a

widespread constraint facing private business in Ethiopia and the
manufacturing sector is no exception. The consequences of inadequate
finance may be particularly more pronounced in the manufacturing sector,
however, given the effects on both sellers (who find it difficult to start and
complete their developments without adequate funding) and on buyers (who
are often unable to secure sufficiently affordable price). In the current
financial environment, both project finance (for developers) and long-term
borrower (for buyers) remain scarce, implying that most manufacturing
sector developers tend to self-finance a majority of their new industry.
Unless the financial system can, over time, provide such long-term financing
to both sellers and prospective buyers, affordability will remain difficult and
the underdevelopment of the financial system will continue to act as a drag
on what could otherwise be much faster and broader growth in the
manufacturing sector.

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Shortage of Production Inputs (Raw Materials): The extent of local
borrowing is constrained by lack of sufficient finance from domestic banks
and other cooperative credit facilities. However, some few incidences of
newly emerging local small-scale organization and cooperative credit that
facilitates extension of small loans to electrical product producers though its
coverage is so small as a result there may have not got a capacity to buy
our product
Lack of Access to Market Information: Updating the business community

on current local and world market trends, prospects and challenges to
properly respond to market demands and design appropriate marketing
strategy is not materialized.
Reliable and update information also helps to utilize opportunities created by

supply shortages other bottlenecks from foreign producers and flexibly meet
changes in product quality and requirement imposed by importers.
Expected Key Risk Factor
Risk is the threat or probability that an action or event will adversely affect
an organization ability to achieve its objectives. The major risks are: Change
in exchange rate or devaluation of dollar may affect import of raw materials.
Expected Contingence Plan for Risk Management
Every project and organization can experience unfavorable incidents that can
prevent it from continuing its normal operation. One of the first contingence
planning to be undertaken is to prepare a comprehensive list of the
potentially serious incident that could affect the normal operation of the

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business. A major risk management technique to mitigate the undesirable
effects is described as follows;
 Maintain risk management plan: Risk Management is the process

of identifying, assessing, responding to, monitoring, and reporting
risks. This Risk Management Plan defines how risks associated with El
Auto Assembly PLC project will be identified, analyzed, and managed.
It outlines how risk management activities will be performed,
recorded, and monitored throughout the lifecycle of the project and
provides templates and practices for recording and prioritizing risks.
The Risk Management Plan should be created in the Planning Phase
and should be monitored and updated throughout the project. For each
risk that will be mitigated, the project team will identify ways to
prevent the risk from occurring or reduce its impact or probability of
occurring.
 Recently despite the government’s big effort to control and maintain
law and order, violence in some parts of the country had destroyed
significant number of factory plants. As this PLC automobile assembly
factory plant will not be imminent of this threat some constant risk
mitigation methods should be maintained thoroughly. This may
include minimizing the stoke of raw materials at the plant to the
minimum, placing finished products to other store or facility ASAP,
arrangement of separate show rooms and if possible, management
(head office), assembly and packing lines in different location,
minimizing the presence of cash all time, minimizing the number of
vehicles at night at the plant, reviewing the insurance policies etc. For
each major risk that is to be mitigated or that is accepted, a course of
action will have be outlined for the event that the risk does materialize
in order to minimize its impact.

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 Volatility of the exchange rate on market price of imported raw
material and final output is a major risk. This can be managed through
importing large amount of raw material once. Besides effective local
marketing and promoting is an important risk management tool
together with quality control
 Development of strong customer relationships
2.

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Internal and External Business (SWOT) Analysis
Internal Strength and weakness Analysis
Strengths
 The Relatively Low labor cost compared with those neighboring African
countries
 The selected production technology will ensure production of high-
quality assembled automobile car at the required time.
 Secured market for its product for reasonable time. Since the demand
supply gap is huge and major quantity is met through import
 Availability of good market for quality assembled automobile car
 Due to the growth in industry, construction and building,
communication and IT sector.
 Stable macroeconomic policy
 Government support
 Long Experience of the Investors in Entrepreneurship and business
management.
 The proposed plant will be equipped with state of the art (modern
technologies) which enables it to produce quality products on shorter
time.
 The plant will adopt modern management system throughout the
plant.
Weaknesses
 Compliance with international quality standards, due to increasing
competition, the import must attain high standards in product quality
 Lack of capacity to diversify and scaling up products due to high
technology cost (Economies of Scale).

External Opportunity and Treat Analysis
Opportunities
 Appropriate incentives by the government plus aggressive marketing
and high-quality standards from plastic product producers. Other
countries in the region like Kenya and Uganda also enjoy zero-rated
tax incentives for imported machinery and equipment. This has
encouraged rapid growth of those automotive industry in these
countries.
 Ethiopia enjoys the tropical climate's distinctive advantage, reliable
infrastructure, abundant water resources and cheap labor that would
allow for continuous production of good quality output. In order to
remain competitive, the challenge facing the producers is therefore,
adequate understanding of the market dynamics in terms of our
product, choice of marketing channels and factors influencing price
fluctuations. Once this is properly documented, the management must
then plan the output production to meet the market demands so as to
reap maximum benefits.
 The various investment incentive extended by government such as
land at low lease cost, improved infrastructural for industry areas and
Sufficient demand for products in the local market.
 Government support to the industry for import substitution and
currency saving and Favorable and supportive government policies
 Good credit facilities & insurance service, Easy access to land,
Infrastructure development and socioeconomic improvement of the
country
 The high demand of the society for the vehicles is one of the leading
opportunities.

Threats
 Shortage of foreign currency for import for assembled automotive
parts, and Political instability in oil producing country
 The import of other similar products that may shift the consumer
preference and Increment of new investors on this field which can lead
to reduction in the market share
 The negative impacts of the continuously increasing cost of production,
i.e., fuel, spare parts and raw materials;
 Advanced production technology employed by foreign manufacturers
which allow them to produce superior quality products at better prices.
Market Analysis
Ethiopian Assembled Automobile Car Market
The growth and transformational (GTP) of the government aimed to

transform the country from agrarian to industrial economy which can be
achieved by huge investment at the initial stage of the developmental
theories. The huge investment is the automotive sector is very critical in
industrial transformation. In the country, like Ethiopia, where the
establishment of industries is very low and the resources is limited, the
transformation challenge is gallant.
Ethiopia has the lowest motorization rate globally, with only two cars per
1,000 inhabitants. Recent reports estimates that in 2019 there were 175,000
vehicles in use in Ethiopia, of which 1000,000 were passengers’ vehicles and

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65,000 were commercial vehicles. However, the recent economic growth
seen in infrastructure development, road expansion, ad dynamic per capital
growth of Ethiopia people believed to substation ate the practicability if the
plan.
Demand and supply of Assembled Automotive Vehicle

Demand for Assembled automotive vehicle
The demand for assembled vehicle is derived from the demand in luxurious
life, change in economic status of the people. The change in per capita
income is the major input in the development of these sectors. In the last
thirteen years, the development of infrastructure specially road in the
country have been increasing.
Table: Assembled Automotive car Consumption
Year Assembled Automotive car Consumption (pcs)
2010 32,140
2011 21,249
2012 22,180
2013 16,053
2014 27,857
2015 25,259
2016 26,629
2017 27,998
2018

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2019
Source: Central Statistical Agency (CSA), 2016/17
According to the above table, the total consumption of assembled

automotive car above increasing trend. Based on the given growth rate the
project future demand of automotive car is forecasted below.
Table: Forecasted Assembled Automotive Car Consumption
Year Assembled Automotive car Consumption (pcs)
2018 29,368
2019 30,737
2020 32,107
2021 33,476
2022 34,846
2023 36,215
2024 37,585
2025 38,954
2026 40,324
2027 41,693
2028

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2029
2030
Supply of Assembled Automotive Vehicle
The domestic supply of the sum of total production by all establishment in

the country and the import.
 Production
There are more than four factories producing assembled automotive car
producing factories. However, the production capacity of some of those
factories are: -
Table: Assembled Automotive car Production Capacity (pcs per year)
Assembled Automotive car Production per yr

Producing companies
Belay Abe Motors 670
Lifan Motors 2100
Mesfin Engineering 490
Others 200
Source: Ministry of Industry/2016/17/
According to the ministry of trade and industry as shown above in the table
all those mentioned factories and the remained unmentioned factories have
an actual production capacity per year is less than 4,000.
Specifically, according to the information from ministry of Industry, the
production of assembled car has been grown by 23% per annum before the
base year.
Table: Assembled Automotive Car Production (pcs)

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Year Assembled Automotive Car Production
(pcs)
2010 300
2011 750
2012 1,200
2013 1,650
2014 2,100
2015 2,550
2016 3,000
2017 3,450
2018
2019
2020
Source: Ministry of Industry /2016/17/
The production forecast for the next ten years, has been carried out using
the average annual growth rate for assembled automobile car. This is 5%
per annum after the base year.
Table: Production Forecast Assembly Automotive car (pcs)
Year Assembled Automotive Car
2021 5,250
2022 5,700
2023 6,150
2024 6,600
2025 7,050
2026 7,500
2027 7,950
2028
2029

Source: Ministry of Industry 2020

As shown above in the table, the production of assembled automobile car
forecasted to reach 7950 pcs at the end of the projection year.
Import
As to end other less developed countries, Ethiopia is one of the importers of
Assembled automobile car from developed nations. The import amount of
assembled car has shown an increasing rate in the past years despite the
import substitution strategy of the government. According, to the data
international trade centre the import has reached 4210 as of 2017.
Year Assembled Automotive Car Production
(pcs)
2010 710
2011 1,210
2012 1,710
2013 2,210
2014 2,710
2015 3,210
2016 3,710
2017 4,210
2018
2019
2020
Source: Ethiopian Revenue and Customs Authority 2016/17

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As shown in the table, the total supply of assembled automobile car has
shown positive and fifty percent /15%/ annual average growth rate in the
past eight years period.
Table: Total supply import projection of Assembled Automobile car /pcs/
Year Import Projection of Assembled
Automotive Car (pcs)
2021 6,210
2022 6,710
2023 7,210
2024 7,710
2025 8,210
2026 8,710
2027 9,210
2028
2029
2030
Source: ERCA,2016/17 and Consultant
Supply projection of Assembled Automotive car

The supply projection of Assembled automobile car /pcs/ is made by
summing up the production and import. As shown in the table below, the
supply of assembled automotive car is expected to increase to reach 17,160
by the end of projection year by 2027.
Table: Supply Projection Assembled Automobile car
Year Assembled Automotive Car (pcs)

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2021 11,460
2022 12,410
2023 13,360
2024 14,310
2025 15,260
2026 16,210
2027 17,160
2028
2029
2030
Source: ERCA 2016/17 and Consultant
Demand- Supply Gap Analysis of Assembled Automobile Car

The through discussion clarifies the ground facts for the increasing demand
for assembled automobile car (pcs) in the country. Thus, the amount of
demand defiantly is more than what is here attempted to discuss
quantitatively.
The demand supply gap analysis is presented in the table below
quantitatively show the existence of huge and continuous unsatisfied
demand for assembled automotive car in the country. The calculated
amount of unsatisfied demand in the country implies if the supply situation
of assembled automobile car continuous with the same trend, the gap of un-
served demand will remain high in the coming years. Therefore, the
quantitative market demand supply gap analysis indicates that the
production assembled automobile car should be encouraged in order to serve
the unforeseen unsatisfied demand.
Table: Demand Supply Gap for Assembled Automobile Car

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Year Demand for Assembled Supply of Assembled Demand-Supply
Automobile Car Automobile Car Gap
2021 33,476 11,460 22,016
2022 34,846 12,410 22,436
2023 36,215 13,360 22,855
2024 37,585 14,310 23,275
2025 38,954 15,260 23,694
2026 40,324 16,210 24,114
2027 41,693 17,160 24,533
2028 43,115
2029 44,581
2030 46,097
Conclusion
This project study has gone through all aspects of the feasibility study,
market, technical and financial aspects and came up with the following
conclusions:-

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 Regarding the market condition, there are a number of producers and
users of this assembled automobile, the demand supply gap analysis
confirmed the product is partially imported from abroad and also
existence of unsatisfied demand which is filled by this manufacturing
factory. Therefore, if the Project sticks to its plan and supply quality
assembled automobile with reasonable price, it will be easy to gain
good market share.
 Technical viability of the project has also been assessed. The PLC has
rented the appropriate machinery and equipment, and vehicle, and
necessary building and construction. And also considering the
organizational structure, the project will implement functional based
organizational structure and the project will hire 34 employees.
 In addition to the above aspects, financial viability of the Project has

also been assessed. As per the projection made on the financial part
of this project, the project is financially viable.
Thus conclude that, the project is viable in all aspects and it has minimum
impact on the environment and also it will contribute the social, economic
development of the country as well if it is properly implement by mobilizing
the required fund for 30% of LC margin from domestic banks for purchase of
assembled automobile car parts.

El Auto Engineering and Trading PLC

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El Auto Engineering and Trading PLC

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EL AUTO ENGINEERING AND TRADING PLC

1 | EALAUTO Engineering and Trading Plc Feasibility Study

The automotive industry is currently the fastest growing industry in Ethiopia.

2 | EALAUTO Engineering and Trading Plc Feasibility Study

Our Vision is to achieve 100% customer satisfaction by delivering quality

In April 2019 an exclusive dealership agreement with singed between JAC

3 | EALAUTO Engineering and Trading Plc Feasibility Study

Our Growth Plan

4 | EALAUTO Engineering and Trading Plc Feasibility Study

A significant portion of EL AUTO’s current demand comes from Taxi drivers

5 | EALAUTO Engineering and Trading Plc Feasibility Study

1. A majority of Cabs (90%) operating in Ethiopia (15,000) are at least

2. As one of the least motorized countries in the world, there was

Figure 2 Africa Motorisation Rate 2015

Proof of Concept (Market and Price Point)

6 | EALAUTO Engineering and Trading Plc Feasibility Study

7 | EALAUTO Engineering and Trading Plc Feasibility Study

Company’s Objectives, Motto, Vision and Mission

8 | EALAUTO Engineering and Trading Plc Feasibility Study

According to the goals and objectives of the organization, the organization

9 | EALAUTO Engineering and Trading Plc Feasibility Study

10 | EALAUTO Engineering and Trading Plc Feasibility Study

Major Facts for the Establishment of El Auto Automobile Car

Automotive sector plays a significant role in the economic growth of our

The development of a vibrant automotive industry is based on ample supply

Key Success factors/ Practical Tips for Success

Macro level Success Factors

 Abundant Labor Resource

11 | EALAUTO Engineering and Trading Plc Feasibility Study

 Support through Policy and Incentives

The government has been steadily pushing towards market-oriented reform

 Customs duty payment exemption on capital goods and construction

12 | EALAUTO Engineering and Trading Plc Feasibility Study

 Increased Domestic Demand

13 | EALAUTO Engineering and Trading Plc Feasibility Study

Sector Level Success Factors

 Cheap labor force

Strategic Recommendations of the Project Consultant

 The automotive industry is only profitable if the projects are completed

Future Challenges and Risk Factors

Generally, this manufacturing industry faces a range of challenges in the

Inadequate Infrastructure: Transpiration facilities in from port to

The provision of supporting infrastructure is a key component to the

Finance Availability: Lack of finance, particularly long-term finance, is a

15 | EALAUTO Engineering and Trading Plc Feasibility Study

Lack of Access to Market Information: Updating the business community

Reliable and update information also helps to utilize opportunities created by

Expected Key Risk Factor

Expected Contingence Plan for Risk Management

16 | EALAUTO Engineering and Trading Plc Feasibility Study

 Maintain risk management plan: Risk Management is the process

17 | EALAUTO Engineering and Trading Plc Feasibility Study

18 | EALAUTO Engineering and Trading Plc Feasibility Study

Internal Strength and weakness Analysis

19 | EALAUTO Engineering and Trading Plc Feasibility Study

External Opportunity and Treat Analysis

20 | EALAUTO Engineering and Trading Plc Feasibility Study

Ethiopian Assembled Automobile Car Market

The growth and transformational (GTP) of the government aimed to

21 | EALAUTO Engineering and Trading Plc Feasibility Study

Demand and supply of Assembled Automotive Vehicle

22 | EALAUTO Engineering and Trading Plc Feasibility Study

Source: Central Statistical Agency (CSA), 2016/17