The start-up auto firm that promised to build Africa’s cheapest car will start assembly at the Thika-based Kenya Vehicle Manufacturers (KVM) before June.
The car, dubbed Mobius, was initially set to cost $6, 000 (Sh516, 000), but expensive spare parts have pushed the unit cost to Sh950, 000—which is almost at par with the average price of a second-hand car.
Mobius is the brain child of a computer engineer Joel Jackson and KVM with the assembly of the first 50 units set to start in the second quarter of this year.
At Sh950,000, the car is still the cheaper than new models that cost upwards of Sh2 million and Mr Jackson says the ability to buy a vehicle designed specifically for the African market will appeal to business owners in need for affordable transportation.
The car is designed for off-roading in Africa and stripped of luxuries including air conditioning, power steering and many internal fixtures.
‘‘We did the prototype last year and this year we are launching the car for commercial sale by second quarter at the KVM,” said Mr Jackson in an interview with the Business Daily last week.
“We will produce 50 cars in the first installment and later scale up production to hundreds by 2015.”
The firm will establish its showroom at Sameer Business Park on Nairobi’s Mombasa Road as it plans for a cheaper model dubbed Mobius 3.
‘‘Production cost is one of the factors that is determining the price of the car, and with costs of the assembling parts going up, we decided to settle on Sh950,000 which is quiet affordable,’’ said Mr Jackson.
But he will have to fight Kenyan’s preference for classy second-hand cars. There are currently around 800,000 cars in Kenya, with around 90,000 sold each year.
Majority of these are second-hand given that 84 per cent or 76, 122 of the new car registrations last year were used vehicles.
But Mobius is mostly targeting the transport sector in the rural areas with poor roads, hence the need for a rugged car.
‘‘Since we developed Mobius 2 and prototyped it, we have been testing it in Kenya’s rugged rural terrain and the response has been solid performance,” says Mr Jackson.
The car has a capacity of eight passengers including the driver and has a large loading space, efficient fuel consumption and easy maintenance. Mobius is already taking pre-orders, but Mr Jackson, 29, did not disclose the numbers.
He says he has raised millions of shillings in funding from equity investors from US, UK, and South Africa.
“I am not in a position to comment about the contribution of the equity investors given the confidentiality agreements, but what I can confirm we are pursuing partnerships with local dealers to provide after sale service,” he said.
Assembly of Mobius cars in Kenya is set to boost activities in the local assembly business which has been riding on tax exemptions.
Imports of vehicle parts are exempted from the 25 per cent tax levied on fully-built units, helping dealers to churn out cars at reduced prices.
Assemblers include Mombasa-based Associated Vehicle Assemblers (AVA), General Motors and KVM—which last year said it was facing cash flow problems that have forced it to reduce staff count to 100 from 240 in 2012.
Car dealers assemble nearly half of the new vehicles sold in Kenya annually, but are showing reduced appetite for local assembly.
The number of locally assembled cars increased 0.57 per cent 4.6 per cent to 5,908 vehicles in eleven months to November.