Companies

Hyundai dealer to assemble locally

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Hyundai Motor logo on a glass door at a dealership in Seoul, South Korea. PHOTO | AFP

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Summary

  • There are two local multi-brand vehicle assemblers —Kenya Vehicle Manufacturers in Thika and Associated Vehicle Assemblers in Mombasa.
  • Assemblers of passenger cars currently enjoy exemption from the 25 percent import duty and could soon be also exempted from 16 percent value-added tax (VAT) and excise duty (20 percent) if the proposals by the Treasury are enacted into law.
  • Cars manufactured abroad are charged import duty, excise duty, and VAT, payable cumulatively and in that order.

Caetano, the local franchise holder of Hyundai and Renault cars, plans to start assembling the vehicles in the country from May, being the recent dealer moving to tap tax incentives in the automotive sector.

The company said it is in talks with a local assembly plant but did not disclose the partner.

There are two local multi-brand vehicle assemblers —Kenya Vehicle Manufacturers in Thika and Associated Vehicle Assemblers in Mombasa.

“We plan to have a local assembly to comply with the direction the government is pushing us,” said Pedro Campos, managing director of Caetano’s Kenya business.

“We are waiting for a formal license from the ministry of industrialisation which should be coming in May, and thereafter two to three weeks we start assembling.”

Assemblers of passenger cars currently enjoy exemption from the 25 percent import duty and could soon be also exempted from 16 percent value-added tax (VAT) and excise duty (20 percent) if the proposals by the Treasury are enacted into law.

Cars manufactured abroad are charged import duty, excise duty, and VAT, payable cumulatively and in that order.

Egypt’s listed auto dealer Ghabbour Auto (GB Auto) has also announced plans to establish a joint venture to assemble and distribute passenger vehicles in Kenya.

The company manufactures, assembles, imports, and distributes vehicles for Hyundai, Bajaj, Mitsubishi, and Volvo.

Caetano is eying local assembly to reduce delivery time and push down the prices of the brands, to increase its market share.

Mr Campos said prices of Hyundai and Renault brands which remained unchanged locally, are expected to rise by more than 15 percent in the second half.

“The price of the imported vehicles will depend on logistics, but our big concern has been delivery time for clients,” he added.

The company sold 26 units of Hyundai models in the quarter to March 2022, according to data from the Kenya Motor Industry Association (KMI).

The tax incentives are expected to expand the list of passenger cars currently assembled locally. Proton and Volkswagen are among the car brands put together at Kenyan plants.

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