Foton Motors targets East Africa market with new Sh1bn vehicle assembly plant
Posted Tuesday, March 27 2012 at 19:41
Foton Motors Ltd, a Chinese motor vehicle maker, says its Sh1 billion assembly plant in Mlolongo, Mombasa Road, is expected to begin production in two months, reflecting growing influence by Asian manufacturers in the region.
The firm is one of the latest motor vehicle makers to eye the fast-growing East African market, after South Korea’s Hyundai Motors, Indian Tata Motors and Ashok Leyland expressed similar interest.
The move by the firms is expected to pile pressure on the more expensive European makes such as Mercedes, Scania, Volvo, Euro Tracker, and Renault.
Foton on Monday launched one of its brands, Tunland, a double-cabin pick-up and light weight commercial vehicle as it looks to expand its footprint in East Africa.
According to the firm, the plant will create 200 direct jobs when it starts operations.
By building the assembly plant, it will benefit from waiver of the 25 per cent duty charged when firms import fully built units.
Prime Minister Raila Odinga said during the launch that motor vehicle firms seeking to establish assembly plants should address the issue of pricing so as to successfully tap the regional market.
“In the past, the fragmented economies of East African countries discouraged the auto dealers from setting up assembly plants,” said Mr Odinga.
“The common market has made it possible for dealers to plan for this market of more than 130 million people.”
He added: “Pricing is responsible for the consumer preferences for second-hand vehicles, which currently command up to 70 per cent of the market share in East Africa.”
The new vehicle brand launched will retail at between Sh2.9 million and Sh3.2 million.
Asian heavy commercial brands are sold at below Sh8 million, which is the minimum price of new European makes like Mercedes, Volvo and Iveco start from.
The plant is also expected to spur competition among established dealers such as Toyota Kenya, DT Dobbie, GM and CMC especially in the commercial vehicle segment.
Hyundai Motors plans to invest $ 22 million in the region in the next three years.
“The plant should be up and running before the end of June this year which should create 200 direct employment opportunities,” said Foton Motors Kenya Ltd sales manager George Osewe.