Motor vehicle assembly set to be re-opened in Thika

Kenya is becoming the next hub for motor vehicle assemblers despite a slow growth in new car sales over the last three months. Leading global brands including Toyota, General Motors (GM), BMW and Daimler (makers of Mercedes brands) already have established local presence through parent firms or dealerships.

But this year’s announcement by Volkswagen (VW) to reopen an assembly plant in Thika is further set to position Kenya as a preferred destination for motor vehicle assemblers.

President Uhuru Kenyatta is today expected to accompany VW Chief Executive Officer Herbert Diess to formally reopen the VW assembly plant after four decades since the German car maker last assembled its brands locally in the 1960s and 1970s.

The revival of the facility inside Kenya Vehicle Assembly (KVA) will enable VW South Africa to sell more vehicles across the East African region, and compete with other leading makes such as Nissan, Toyota, Isuzu and Mitsubishi .

VW, in which the Kenyan government has 35 per cent stake, announced last week it will assemble 1,000 cars annually beginning next month and offer over 300 jobs to Kenyans For the first time Kenya will produce sport utility vehicles after years of assembling trucks, pick-ups and buses from kits supplied by foreign manufactures.

Toyota Kenya had in October announced plans to start local assembling to meet growing demand. Earlier in the year, the government bowed to pressure from General Motors and Toyota — the major vehicle assemblers in the country – who had openly expressed dissatisfaction on the introduction of excise duty on locally assembled vehicles.

The opposition prompted the government in September to revoke the levy following the signing of the Finance Bill, 2016 . Excise duty had first been introduced on motor assemblers at a flat rate of Sh150, 000 per vehicle in 2015 before it was increased to 20 per cent of a vehicle’s value in June this year.

Following the scrapping, industry analysts said they were expecting more car firms to set up production lines locally. “The tax regime would have prevented the industry’s growth, particularly to assemblers and discourage those with plans to set up production lines locally,” said Dinesh Kotecha, a director at Simba Corporation, the local franchise holder for Renault.

Local assembler has announced plans to roll out its second model christened Mobius II. The vehicle is currently undergoing engineering and test phase ahead of its launch next year. The firm plans to use new technology in the new extra features in the new model.

“We’re excited about the launch of our new Mobius II model next year, which will see significant ramp up in production volume. Mobius is founded on the idea of transforming Africa’s transportation system and we can’t wait to put many more Mobius cars in the hands of Kenyan customers with this next-generation model,” Mobius Motors Chief Executive Officer Joel Jackson.

The first Mobius — designed for rough terrain — rolled out of the KVA facility in 2014 and retailed at Sh950,000. “We are very excited for the upcoming launch,” said the firm’s Mobius Motors Chief Operating Officer Sunru Yong said.
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Written by Eugene Cardus

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