Corporate News

Thika assembler starts building Africa’s cheapest car

 Mobius is the brain child of computer engineer Joel Jackson. FILE
Mobius is the brain child of computer engineer Joel Jackson. FILE 

The start-up auto firm that promised to build new cars worth $6,000 (Sh525,000) each for African roads has started assembling at the Thika-based Kenya Vehicle Manufacturers.

The car, dubbed Mobius, is the brain child of computer engineer Joel Jackson and KVM has started the assembly of five units — supported by parts from Toyota — and plans to increase production to more than 500 units from mid-2014.

The car, designed specifically for off-roading in Africa and stripped of luxuries including air conditioning, power steering and many internal fixtures, targets small business owners in need of affordable transportation.

At $6,000, the car is cheaper than a four-year-old second-hand Toyota car which sells for around $10,000 (Sh872, 900) and new models that cost upwards of Sh2 million.

“We started assembly of Mobius two weeks ago. We are building five prototypes and the units under production will grow to more 500 cars next year depending on sales between now and December,” said Mr Ralph Hruschka, the quality manager at KVM, in an interview yesterday with the Business Daily.

Grow local content

Currently, over 35 per cent of the vehicle’s cost is sourced domestically and Mobius Motors is looking to grow local content beyond 40 per cent.

“The vision of Mobius is to build a more appropriate and affordable vehicle for transport businesses and in turn create a platform for mobility across Africa,” Mr Jackson, Mobius founder and CEO, told Reuters recently.

“Thus, from the ground up, we’ve designed a car optimised for rugged roads, with large versatile loading space, efficient fuel consumption and easy maintenance.” He added that the firm, which had 24 employees in May, had raised millions of dollars of investment to scale up production.

The firm’s choice of Kenya is set to boost activities in the local assembly business which has been riding on tax exemptions.

Imports of vehicle parts is exempted from the 25 per cent tax levied on fully built units, helping dealers to churn out cars at reduced prices.

Shifting assembly

Assemblers include Mombasa-based Associated Vehicle Assemblers (AVA), General Motors and KVM—which is facing cash flow problems that have forced it to reduce staff count to 100 from 240 last year.

“We are looking for new businesses like Mobius since we have built 900 units over the past year compared to about 2,000 units last year against our capacity of 6,600 cars,” said Mr Hruschka.

AVA last year said it was making 2,500 units compared to a peak of 10,000 units in 1985. The Thika-based assembler is owned 35 per cent by the Treasury, DT Dobie (32.5 per cent) and CMC (32.5 per cent).

KVM’s outlook was worsened by the end of the contract to assemble Land Rover Defender models after the franchise of the brand was taken from CMC and handed to rival firm RMA—which is yet to offer a fresh deal.

Car dealers have reduced their enthusiasm to assemble vehicles locally after they cut production in the first four months of the year by 14.6 per cent to 1,597 vehicles, according data from the Kenya National Bureau of Statistics (KNBS).

The sale of new cars increased 8.2 per cent to 4,109 cars, a pointer that local dealers are increasingly importing fully built cars and shifting assembly to other markets like South Africa, especially General Motors.