Industry

Egypt-based firm to set up Kenya vehicle assembly

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Motor vehicle assembling at the Associated Vehicle Assemblers plant in Mombasa. FILE PHOTO | NMG

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

The company made the announcement last week following a board meeting in a regulatory filing to the Egyptian Exchange (EGX) seen by the Business Daily.

The firm, which deals in cars, buses, lorries, and motorcycles, said its board of directors had approved “the participation in the establishment of a company in Kenya under the name of GB Automotive for car trade and manufacturing”.

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

GB Auto operates in trading, distributing, and marketing all vehicles including heavy trucks, semi-trucks, passenger cars, buses, agriculture tractors, and pick-ups.

The wealthy Ghabbour family of Egypt founded GB Auto, in 1985 and holds a majority 62.9 percent stake in the auto firm.

The firm has since then grown to become one of the leading car assemblers and distributors in the Middle East and North Africa and plans to expand beyond the region, it said earlier.

GB Auto has an exclusive agreement to import and sell Japanese automaker Mazda-branded vehicles in Egypt.

The company also has an exclusive licence from South Korea’s Hyundai Motor Company to assemble and distribute Hyundai cars in Egypt.

GB Auto is also the exclusive distributor and aftersales service provider for China’s Chery-brand vehicles in Egypt.

Its Kenya expansion plans come at a time the government is set to exempt locally assembled passenger cars from VAT and excise taxes, a move that could see prices of the automobiles fall by hundreds of thousands of shillings.

This will see the cars exempted from the entire major taxes that are applicable on fully-built units imported from overseas markets like Japan, the UK, and South Africa.

Cars manufactured abroad are charged an import duty of 25 percent, excise duty of 20 percent and value-added tax of 16 percent, payable cumulatively and in that order.

Import duty

Assemblers of passenger cars such as Simba Corp (producer of Proton cars) and DT Dobie (Volkswagen) currently enjoy exemption from the 25 percent import duty.

Sales for locally assembled vehicles rose to a record 70.6 percent of the total sales in 2021, moving 10,054 units compared to 4,195 units of fully-built imported vehicles.

The major assembly plants are Nairobi’s Isuzu, Mombasa’s Associated Vehicle Assemblers (owned by Simba Corp), Thika’s Kenya Vehicle Manufacturers (owned by the government, DT Dobie and CMC Holdings).

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