The growing automotive industry in Kenya

11/19/2018 11:13:14 AM
Author: Andrea Dijkstra

A growing number of global companies are assembling vehicles in Kenya; bolstering government plans to develop a regional vehicle-manufacturing hub, which has already produced “Africa’s cheapest car” and a “Kenya-made motorbike”. 

Things are looking up for Kenya’s vehicle-assembly industry with the recent entry of major auto manufacturers, like Japanese giant Toyota, Germany’s Volkswagen and France’s PSA Group, the maker of Peugeot. Furthermore, Swedish truck maker, AB Volvo, expects to unveil its Kenyan truck assembly plant later this year, while the Japanese Nissan Motor Corporation plans to have an assembly line in the East African nation by the end of 2019. 

Increasing need for car ownership 

“We believe that Kenya has the potential to develop a big, fully fledged automotive industry,” says General Manager Communications Volkswagen of South Africa Matt Gennrich. “People in Africa are moving increasingly into the middle class, so the need for mobility and, ultimately, car ownership, increases.” The German car giant plans to manufacture and sell around 5,000 cars in Kenya each year. 

The increase in manufacturing plants, which is partly a result of tax incentives on the importation of unassembled vehicles – units shipped in parts are not taxed - while complete vehicles are subject to a 25 percent import duty – might also lead to more competitively priced cars. 

Kenya produces Africa’s cheapest car 

Kenya now also produces “Africa’s cheapest car”, bringing to reality the dream of British entrepreneur Joel Jackson who designed it four years ago. The first generation of the Mobius II can seat eight passengers, has a large cargo space, and is supposed to have efficient fuel consumption and easy maintenance. This first generation car came without glass windows (apart from a windscreen at the front), but after selling out the first batch of 50, the developers designed the next-generation Mobius II based on market feedback, like adding windows, power steering and air conditioning to make the car more suitable for urban settings. 

Although many Kenyans cannot afford its entry price – around US$13,000 – the carmaker is confident about the market. “Our customers receive a brand-new SUV with the durability required to handle rural roads, sold at the price of a used sedan,” says Commercial Director, Mobius Motors Markus Schroder. “In comparison, a small, used import SUV typically starts at 50 percent more, is seven years old with tens of thousands of kilometres on the clock, is not designed for local infrastructure, carries no warranty and is expensive to maintain with genuine parts,” adds Schroder. While the earlier ultra-budget Kenyan SUV was assembled at Thika-based Kenya Vehicle Manufacturers, Mobius Motors will open its own production facility – later this year – where selected customers will be allowed to take factory tours as part of the vehicle-purchase experience. 

Reducing chances of an accident  

Recently, the East-African nation produced its own motorbike – the Kibo K150 – a street/off-road hybrid that has large wheels, tyres suited to both types of terrain, and a suspension system that allows riders to carry loads of up to 250 kg. The Kibo K150 is manufactured by Kibo Africa, a new startup founded by Dutch economist Huib van de Grijspaard, who aims to increase mobility while reduce the chances of an accident. Customers, however, complain about the US$3,800 price tag, which only companies and NGOs can afford. “Our current K150 model mainly targets business-to-business customers, but we shall soon launch business-to-customer models for lower segments,” says Terry Ojiambo, Marketing and Communications Manager at Kibo Africa, which currently sells 65 bikes per month but plans to increase this to 2,000 per month in 2021. 

While Kenya’s car industry is still undefined, auto manufacturers seem to be confident about its future. “Kenya provides the right environment to establish a successful business – it’s a dynamic and growing market and there is a strong pool of talent available,” adds Schroder, who believes that the growth of car manufacturing will be a vital part of Kenya’s industrialization story over the next decade and beyond.

Photo credits: 
Volkswagen / Mobius Motors / Kibo Africa

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