KVM assembled vehicles output declines to 2pc


Workers at a Volkswagen production line at the Kenya Vehicles Manufactures (KVM) in Thika, Kiambu County. PHOTO | DIANA NGILA | NMG

Thika-based Kenya Vehicle Manufacturers (KVM) has seen the utilisation of its plant drop to a low of two percent, reflecting reduced demand for the wide variety of brands it assembles.

A National Automotive Policy recently submitted to Parliament recently shows that KVM is the worst performing assembler in the country but other plants are also producing less than 40 percent of what they are capable of.

Mombasa-based Associated Vehicle Assemblers (AVA) lead with a plant capacity utilisation of 35 percent followed by Isuzu East Africa (23 percent).

KVM’s low performance came despite it having the most clients and contracts. The assembler puts together multiple vehicle brands including those from Crown Motors (Nissan), PSA Group (Peugeot) and CMC Motors (Nissan Diesel, Eicher, and MAN).

It also builds bodies for various commercial vehicle brands –Hyundai, Eicher, Isuzu, Mitsubishi, UD, Tata, Hino, Scania, MAN, and Ashok Leyland.

KVM’s shareholders are the National Treasury with a 35 percent stake, CMC (32.5 percent), and DT Dobie (32.5 percent). The company’s low output is a reflection of reduced sales of the brands it assembles while rival plants have gained from higher orders for the models they put together.

Isuzu, for instance, has gained from rising sales of its namesake commercial models that have seen it take a 43 percent market share in the new vehicle market.

The dealer assembles its vehicles at its Nairobi plant which churns out the highest volumes despite ranking second in terms of plant capacity utilisation.

AVA’s performance in terms of plant usage is derived from a mix of assembling for its parent firm Simba Corp as well as for other dealers with significant sales.

The company assembles Mitsubishi and FUSO commercial vehicles for Simba Corp, Tata, Hino and Toyota (for CFAO Motors Kenya), Scania (Kenya Grange), Foton, Volvo and Daewoo.

The national average for utilisation of the three vehicle assembly plants stands at 20 percent. The policy document seeks to promote an environment that will foster the growth of the automotive sector by, among others, restricting imports of used vehicles.

“The Government of Kenya will always provide the necessary support to its valued investors and other partners in the local automotive industry towards addressing emerging issues in advancement of the industry,” the Cabinet Secretary for Industry Betty Maina wrote in the document.

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