Toyota Kenya opens Sh500m bus assembly plant in Mombasa

Toyota Kenya has invested Sh500 million in a truck and bus assembly plant complete with a new showroom to improve marketing.

The Japanese auto maker Tuesday launched the assembly with the first Hino truck and bus rolling off the plant in Changamwe.

Speaking at the Associated Vehicles Assemblers (AVA) Mombasa where the vehicles are being assembled, Hino Motors general manager Kazuhiko Wanabe said it expects to produce 40 trucks and buses each month but will increase production to 200 units within a few months of operation. Toyota hopes to sell 1,200 Hino units by 2015.

READ: Toyota starts assembling buses locally

“Being the largest vehicle assemblers in Kenya, AVA was a natural Hino production partner. Our engineers are especially impressed by the level of expertise of the Kenyan workforce and we hope to continue growing local skills and indigenous industry capacity as our business grows,” said the general manager of the firm owned by Toyota Group.

The launch of the plant is expected to take competition to other bus makers including General Motors East Africa, which currently commands the biggest portion of the market from its flagship Isuzu trucks and buses. Toyota has largely been confined to the small cars and trucks segment.

READ: GM widens lead over Toyota on growing demand for trucks

The company is expected to price its products competitively, given the tax incentives on importation of completely knocked down units (CKD).

The parts, which are used to assemble vehicles, are zero-rated while vehicles are subject to a 25 per cent import duty.

Hino is a Tokyo-based subsidiary of Toyota Motor Corporation, and Kenya will be the first country in Africa where it has set base.

General Motors has in the recent years maintained a lead over Toyota in new vehicle sales with a 27 per cent stake compared to the latter’s 24 per cent according to 2012 figures.

Mr Watanabe said the company recognised that the project was in line with the government’s commitment to attaining Vision 2030, noting that they had signed a memorandum of understanding with the government.

“We recognise creation of jobs as a crucial contributor to the country’s economy as recognised in the economic pillars of Kenya’s Vision 2030. We will transfer technology thorough placement of Japanese engineers at the AVA plant,” he added.

Middle income

Vision 2030 director general Mr Mugo Kibati who was the chief guest said the government would support investors.

“We have worked very hard over the past 10 years to provide the legislative and infrastructure framework necessary to prepare Kenya for the jump from ‘third world’ categorisation to ‘middle income’ status.

He noted that the investment was a sign that businesses were still confident about the economy ahead of the March 4 General Election.

Through Hino, Toyota Kenya will also be working with Busmark SA, the leading South African bus builder, to introduce high quality buses that meet the world’s most stringent safety standards.

According to Toyota Kenya chairman Mr Dennis Awori, the company would market Hino trucks in the East African region in its second phase of the project.

“We plan to market the Kenyan built Hino further afield to the rest of the East African Community and beyond.  For this reason, we urge the Kenya Government to re-double its effort to get our locally assembled vehicles accepted by our neighbours as made in East Africa and therefore duty exempt,” he said.