Car and General Sales Executive Tom Mburu (second right), shows the TVS Wego motorcycle to riders during the Boda Boda Safety Awareness Day. PHOTO | POOL
The company currently assembles the TVS brand of motorcycles in Nakuru and the Piaggio brand of tuk-tuks in Mombasa and Thika.
The strategy signals the company’s readiness to produce more components locally, with full-scale manufacturing likely to take more time.
The move also indicates that Kenya’s total manufacturing cost could now be at par or lower compared to Asian markets which are the main suppliers of motorcycles and tuk-tuks.
Car & General #ticker:CGEN plans to start local manufacturing of motorcycles and three-wheelers (tuk-tuks) amid rising demand for the equipment across the country.
The company currently assembles the TVS brand of motorcycles in Nakuru and the Piaggio brand of tuk-tuks in Mombasa and Thika. The equipment is distributed in Kenya and other markets in the region.
“We are exploring other opportunities related to the localisation of manufacturing of two wheelers and three wheelers in Kenya,” C&G chairman Nicholas Ng’ang’a wrote in the company’s latest annual report.
The strategy signals the company’s readiness to produce more components locally, with full-scale manufacturing likely to take more time.
The move also indicates that Kenya’s total manufacturing cost could now be at par or lower compared to Asian markets which are the main suppliers of motorcycles and tuk-tuks.
It promises to create more jobs in the industry that has attracted more assemblers who benefit from more favourable tax rates compared to those importing fully-built units.
There are an estimated eight motorcycle assemblers in the country including Toyota Kenya which produces the Yamaha brand, Makindu Motors (Skygo) and Honda Motorcycle Kenya (Honda).
Motorcycle completely knocked down (CKD) parts headed to assembly parts are charged an import duty of 10 percent while those already fully-built pay a higher 25 percent duty.
There is no excise tax on CKD parts while motorcycles are charged Sh11,065 per unit. Importers of CKD also pay lower import declaration fees and Railway Development Levy.
The tax differential is designed to encourage local production which creates factory jobs and supports auxiliary industries.
The number of assembled motorcycles has risen sharply in recent years and has nearly caught up with imports, indicating that local firms are gaining in price advantage partly driven by the tax incentives.
Motorcycle imports rose 1.6 times from 145,900 in 2016 to 232,900 in 2020 while locally assembled units nearly doubled from 108,100 to 210,900 over the same period.
Tuk-tuks and motorcycles have become popular in the transport of goods and people due to their ability to beat traffic in towns and reach final destinations. For C&G, manufacturing of the equipment will mark an expansion of its investment in the sector, with the company also producing helmets for motorcycles.
The plant, which started producing helmets in September last year, has a capacity to produce 768,000 units per year, with plans to increase this to 1.2 million units in the short term.
