Treasury's Yatani mulls incentives for car assemblers

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

The Treasury plans to effect an incentive policy that could see a reduction in costs of locally assembled vehicles targeting passenger cars.

Treasury Cabinet Secretary Ukur Yatani said the government is working on a framework to cut the cost of assembling personal cars in a bid to discourage imports.

“Whereas assembly of commercial vehicles has registered tremendous growth, the 28 passenger category of motor vehicles remains underdeveloped. This category is still dominated by imported used vehicles comprising over 70 percent of passenger vehicles, which is largely attributed to the high cost of assembly,” he said when he presented his budget policy statement on Thursday.

“In this regard, the government is working on a framework to support the assembly of affordable passenger vehicles” he added.

There are few firms assembling passenger vehicles in Kenya partly due to imported second-hand units which account for 88 percent of all auto imports.

Local assemblers of cars in Kenya include Mobius Motors and DT Dobie that assemble Volkswagen Polo Vivo.

Firms enjoy exemption from 20 percent excise duty on locally assembled vehicles, exemption from 25 percent import duty on completely knocked down kits and reduced corporate tax at 15 percent from 30 percent on the first five years of operations.

The move was aimed at creating job opportunities. The government has licenced 13 motor vehicle and 17 motorcycle assemblers.

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