Vehicle assembling industry players bet on State incentives to shore up growth

Former President Uhuru Kenyatta during a tour of the Associated Vehicle Assemblers in Miritini, Mombasa County on December 15, 2020. [File, Standard]

The local automotive assembly sector is headed for a boom following continued government incentives, a thriving construction sector and a raft of other favourable factors.

Industry players say that the 10 per cent Central Bank of Kenya (CBK) lending rates, a strong shilling, growing agribusiness, and inter-Africa trade could aid the sector's growth.

Isuzu East Africa managing director Rita Kavashe said on Monday that locally produced vehicles have grown at 85 per cent compared to imported vehicles.

She said this was a major growth compared to 45 per cent of locally produced vehicles about 10 years ago. Ms Kavashe said the future looked bright for them with the favourable government policies and prevailing business environment. "Locally assembled vehicles were at 45 per cent, while those imported were at 55 per cent, about 10 years ago. But it is the reverse; we are now at 85 per cent," she explained.

Kavashe was speaking during the handover ceremony for a Sh17 million UD Quester truck to Tawakal Bus Limited at the Total Energies New Service Station in Jomvu, Mombasa County.

Key players in the local vehicle assembly sector are Isuzu East Africa, Kenya Vehicle Manufacturers (KVM) and Associated Vehicle Assemblers (AVA).

Isuzu East Africa sales and marketing director Wanjohi Kangangi said the firm was set to start assembling the MUX Isuzu seven-seater 4X4 SUV in the Nairobi assembling plant from November this year.

"This vehicle has replaced the Isuzu Trooper, and its local assembling will see the price come down to about Sh10 million from the current Sh12 million. Local assembling will also create jobs and enable the transfer of skills," he stated.

Tawakal Bus managing director Hemmed Twaha,said they have been acquiring the UD Quester trucks because of the technology involved and enhanced efficiency in fuel consumption. The truck can haul up to eight tonnes at a time.

Kavashe said vehicle assemblers are working closely with the government on the automotive policy to ensure a boom in local manufacturing and promote the Buy Kenya Build Kenya initiative.

The local assemblers have enjoyed import and excise duty exemption for the semi-knockdown kits to promote local assembling. The local automotive assembly has an installed capacity to assemble 46,000 units annually.

Imported vehicles, including the second-hand ones, attract between 25 per cent and 35 per cent duty.