I read a really interesting article in The Economist recently about cars in Kenya. Like other countries the Government is meddling in the industry – albeit to try and boost their own manufacturers.
Most cars in the market appear to be second hand and the article quoted importers as saying that as much as 90% of the market is dominated by cars that have been imported from Japan. When I had a look at cheki.co.ke, one of the used cars sites in Kenya, it certainly looked like that was the case with a lot of used Toyota’s and Nissan’s for sale.
The article also said that the market for used cars has grown to about 110,000 units a year which is a 40% increase in the last 5 years. To protect the local manufacturers, new taxes were introduced late last year to increase the price of the imported vehicles. It is a flat rate, so it increases the cost of the cheaper cars more than the more expensive luxury ones brought in from Europe.
As the Government won’t allow cars older than 8 years to be imported, they have also added a higher tax to cars that are reaching that age. The tax is also being applied to commercial vehicles too and that affects the business end of the market, causing costs to rise across the country. To get around the age limit, importers ship to Uganda and then bring them in as this does not attract the age limit!
I had read a report last year that described how a lot of luxury cars that were stolen in Europe found themselves in Kenya. Apparently they get shipped out via Oman and then on to other countries before reaching Kampala.
The Government is trying to start a manufacturing base in the country hence the desire to price the imported cars out of the market – and get some extra cash if people still want them – which they clearly do, despite an immediate 30% decline in sales after the tax was introduced.
In 2014, Kenya Vehicle Manufacturers (KVM) launched the Mobius II, a cheap 4WD that is “built for Africa”. It doesn’t have many features and was designed to be simple to build – it has panels which are bolted to a whole vehicle space frame for strength and roll over protection. There are no frills (or possibly thrills) and it looks like a military vehicle.
It’s powered by a 1600cc 4-cylinder motor giving 86hp. As the Commercial Director used to work for Nissan Poland, it might not be a stretch to suggest that is the source of the engine. Vehicles parts are exempt from import duties and they would need a very reliable unit for the car – I haven’t found the actual source yet!
The Mobius II costs around US$9,500 with initially 45% of the car built from local sources making it a true local car built for local conditions. The company was partially funded by Ronald S Lauder, one of the heirs to the Estee Lauder fortune. For Australian readers, he also created RSL Com, now Commander, the telecommunications company.
Kenya has two other assembly plants operating in the country making trucks with General Motors (GM East Africa) and Toyota (Associated Vehicle Assemblers). Isuzu and Hino are the brands assembled at these plants. Therefore KVM is the only true local manufacturer of vehicles designed, engineered and built in the country. They are looking at other models and could be a huge success for the whole continent, after all, if the vehicles work well in Kenya, why couldn’t they be sold everywhere?