The Kenyan market industry has taken another path of investment as the Global automotive manufacturer Nissan has announced plans to invest KSh 2 billion in a local assembly line, a move that will make Kenya the 21st country where the company manufactures vehicles.
Nissan will become the eighth company to set up an assembly plant in the country, with many other top global vehicle makers having already expressed interest of manufacturing locally.
This will be a major boost for Kenya’s automotive industry which is growing at an impressive 11% per annum.
The country is expected to hit a motorisation rate of 56% by 2030, far outstripping Africa’s rate of 42%.
Last week, President Uhuru Kenyatta and his French counterpart Emmanuel Macron unveiled a locally-assembled Peugeot 3008, SUV, the second model assembled in Kenya by the Thika-based French vehicle manufacturer, PSA Groupe.
The firm which is the second largest car manufacturer in Europe inaugurated the Peugeot 508 saloon in 2017.
Manufacturing of two additional models is expected to start later in 2019, with the manufacturer hoping to soon assemble at least 15,000 vehicles in the country annually for both the local and regional markets.
Toyota, Isuzu, Tata, Hyundai and recently Volkswagen are among the other top manufacturers with established local production lines.
Uhuru directed all ministries and other state agencies to buy locally assembled cars and spare parts in a bid to support the local manufacturers.
He ordered the executive decree be strictly adhered to as an affirmation to his commitment in supporting the Buy Kenya Build Kenya policy.
“This policy directive is intended to promote our agenda on manufacturing, creating good jobs for our people, and enhancing technology transfer to our country,” the President said.
To further boost local manufacturing, the government has gone all out to ensure a conducive environment for automakers.
It is already working on a national automotive policy that will see among other things, a reduction of the age of imported used cars from the current eight years to five years later this year and ultimately to three years by 2021.
The import limitation is expected to significantly escalate the cost of imported vehicles, subsequently pushing buyers to the local market.
According to Tim Jaques, the Nissan Kenya chairman, such regulation will also mean safer and cleaner cars on Kenyan roads.
The once-thriving local car assembly sector has in recent years choked under the weight of a booming second-hand car imports market. Currently, none of Kenya’s three motor vehicle assembly plants utilise more than 35% of their capacity.
Associated Vehicle Assemblers in Mombasa is operating at a 35% capacity, Nairobi’s Isuzu East Africa Limited at 23% while the Thika-based Kenya Vehicle Manufacturers is operating at a measly two percent.
Laban Dundo a manager at KVM, revealed that the assembly plant has the capacity to assemble 6,500 vehicles annually in a single shift but currently produces not more than 400 vehicles annually.
Nissan is expected to first assemble Nissan pickups from semi-knockdown kits on the condition that the government agrees to waive a 25% import tax.
The company will submit a proposal to the government once market studies and due diligence studies have been completed and is expected to have an operational assembly line by the end of 2019 if it receives the green light.