Papua New Guinea’s largest motor dealer, Ela Motors, is planning further investment in Papua New Guinea as part of moves to bolster its already strong position in the domestic vehicle market.

Ela Motors’ Waigani showroom

Chief executive Takeshi Abe told Business Advantage PNG that Ela Motors has invested substantially in its logistics and branch operations in PNG over the last two years. The intention now is to rebuild the Badili head office and branch, and the Lae branch.

The company, which is owned by Toyota subsidiary Toyota Tsusho South Pacific Holdings, has more than half of PNG’s motor vehicles market.

Abe says that, based on overall business volumes, PNG remains in the top group across Toyota’s South Pacific regional network.

‘Considering the potential of PNG in the long term, we did not stop our investment and also sustained the number of employees by improving our business efficiency.’

‘Regarding PNG, Ela Motors does think there is a big potential for the automotive market,’ he says.

Investment to continue

After several years of record sales, total automotive sales in PNG were down by about 3 per cent year-on-year in 2015, falling from 8,305 to 8,054 units. Abe says Ela Motors’ sales dropped in proportion to its overall market share.

Ela Motors CEO Takeshi Abe

‘However, considering the potential of PNG in the long term, we did not stop our investment and also sustained the number of employees by improving our business efficiency and reducing unnecessary costs,’ he says.

Ela Motors’ most recent investments in PNG have included a new showroom at Waigani and a logistics centre at Lae that commenced operations in February 2015. The logistics centre incorporates a national parts depot, which supplies spare parts and accessories to the group’s national network of 16 branches.

‘The majority of vehicles and outboard motors sold in PNG are not used for recreation, but are essential items to run a business.’

The centre also has a bond yard and parking area to cater for up to 400 vehicles, and a dedicated workshop for pre-delivery inspection and accessory fitting.

To grow and develop the technical skills and knowledge of staff, Ela Motors has also established a new training centre, called the ‘Ela Academy’, at its Badili head office.

‘The next big investment plan, which we look for a span of five years, will be the total renovation of our Lae branch and Badili branch and head office,’ says Abe.

Tough conditions

Abe acknowledges that business conditions in PNG are currently ‘very tough’. The challenges have been exacerbated by the country’s recent foreign exchange restrictions, which have had an impact on the ability to pay product and parts suppliers.

He adds that the depreciation of the kina increases the cost of imported items and may force the automotive sector to review costs and pricing. This would also affect business.

Ela Motors’ training

‘The majority of vehicles and outboard motors sold in PNG are not used for recreation, but are essential items to run a business,’ he observes.

Long term view

Abe says that, despite the challenges, Ela Motors is in PNG for the long term.

‘Looking at the future potential of the country, we will not stop our improvement,” he says. ‘PNG’s ongoing, and planned, resources and infrastructure projects may boost the economy in the long term.

‘Especially for the vehicle market, the development of infrastructure will be the key. Vehicle demand may increase with the improvement of roads and the development of new road connections which, in turn, will create further demand for transportation and distribution of goods and people.’