Ela Motors’ David Purcell

Business Advantage PNG (BAPNG): The last time we met, at the end of 2011, you talked about the market being quite heated. A year on, are you seeing any indicators that things are starting to quieten down?

David Purcell (DP): I think it’s fair to say that we are seeing a mild stabilisation of the market but it’s what we expected.

BAPNG: Is your business mix the same, or are you finding that it’s changed over the last twelve months?

DP: It’s very much the same. The truck market is still very strong. The Yamaha market is still strong. The Toyota market has always been strong and remains that way. We’re moving as many as 500–600 units of Toyota in a month, and only importing a similar number, so we’re on a pretty lean inventory. The business is still going very well. The economy, as we see it, is still going quite strongly.

I’m confident we’re entering a period of stabilisation and consolidation.

BAPNG: Is this giving you the confidence to invest?

DP: We’ve finished our acquisition of the land for our new logistics centre in Lae. In Port Moresby, we’re in the process of renovating our truck service department and we’re just building a new pre-delivery centre. We’ve taken on some more land for a whole new training centre too. We continue to invest, we think, in a prudent fashion.

BAPNG: You’ve recently completed forecasts for Ela Motors’ Japanese parent, Toyota Tsusho. What are those forecasts saying?

DP: We know some time in the future, the market will decline somewhat and is part of a normal cycle. When is anybody’s guess. As far as the impact on our business: I think that it will continue to be pretty buoyant for the next five, maybe seven, years. It may go up and down from time to time but the trend-line will continue upwards.

I’m confident we’re entering a period of stabilisation and consolidation. I really don’t mind if things slow down a bit because that is actually better for the economy, for consumers, and for business. It’s difficult to forecast if you’re experiencing double-digit growth year-on-year. How do you forecast investment? How do you forecast manpower requirements and inventory levels? The trap for inexperienced businesses is to get over-excited, over-enthusiastic, over-committed. Then, when a market stabilisation occurs, all of a sudden you’re trapped with a business that’s geared the wrong way. So I see it as a positive that there is a consolidation.

BAPNG: Even though PNG may not have double-digit growth in the future, has it entered a new phase of maturity as an economy?

DP: I actually think it has. I think the Government is to be congratulated on the way it’s managed the PNG LNG project. There were always going to be issues, but I feel that the Government and Papua New Guinea as a nation have come out of this with a better skill set.

David Purcell is Chief Executive Officer/Director of Ela Motors, the trading name of Toyota Tsusho (PNG) Ltd.