Volvo gears up for Sh2.5bn Kenya trucks assembly line

What you need to know:

Volvo Trucks’ local dealership partner, Necst Motors, will provide the capital for the establishment of an assembly line
Necst has also committed to set up 20 Volvo Trucks workshops in the East African region over the next five years.
Kenya will become the third African country to host Volvo Trucks assembly facility, after South Africa and Morocco.

Volvo Trucks is set to begin assembling lorries in Kenya next year as part of a Sh2.5 billion ($25 million) investment that will see the Swedish company become the latest motor vehicle maker to go into local production.

Under a dealership agreement signed yesterday, local dealer NECST Motors will provide the direct investment capital for the assembly line at the Associated Vehicle Assemblers plant in Mombasa. NECST has also committed to set up 20 dealerships in East Africa.

“We believe strongly in the growth of this region, Kenya and the neighbouring countries, and that’s why we think now is a better time to invest in this country,” said Vovlo Trucks president Mr Claes Nilsson.

Kenya will become the third African country to host a Volvo Trucks assembly facility, after South Africa and Morocco.

The deal with NECST is a turning point for Volvo Trucks, which says it did not sell any lorries in Kenya last year. Volvo Trucks said its previous dealer, Portugal’s Auto Sueco, was unable to accommodate the East African expansion plans.

“The former partner we had here was not really prepared to invest in what was needed to take care of our customers. And it’s also obvious for us that we need local manufacturing,” said Mr Nilsson.

NECST Motors is a new company partly owned by Mr Erik Eberhardson, who is also the founder of Ferronordic Machines, a Volvo dealer in Russia.

Volvo Trucks will be targeting the long-haul transport market with its vehicles.

With the standard gauge railway expected to eat into the cargo transport business, Mr Eberhardson said he sees opportunities in providing last mile connections — from the rail stations to the final destination.

The Swedish firm joins other European vehicle brands that are setting up local assembly.

Last year Germany-based Volkswagen launched local assembly of a passenger car, France’s Peugeot SA is expected to go down a similar path later this year while Italy’s Iveco has said it will build a Sh2.3 billion plant in Mombasa.