Market News

Assemblers take 75 percent share of new vehicle sales

assembly

Isuzu East Africa Vehicle Assembly plant staff at work as seen during a media tour along Mombasa Road on December 6, 2018. PHOTO | DIANA NGILA | NMG

The share of locally assembled vehicles has risen to a record 75.5 percent of new automotive sales as formal dealers continue to benefit from government policies aimed at encouraging local production.

Data from the Kenya Motor Vehicle Industry Association (KMI) shows that firms including Isuzu East Africa and Simba Corporation assembled 4,174 units out of the total of 5,526 new vehicles sold in the five months to May.

The share of locally assembled vehicles has been rising sharply in recent years. The latest data shows that it climbed from the previous peak of 70.6 percent in the year ended December 2021.

Companies strong in local production have linked their rising fortunes to support from the government which has enacted favourable policies besides being one of the biggest buyers of new vehicles.

In the latest measures, the Kenya Bureau of Standards (Kebs) said in a notice that used buses more than seven metres in length will not be imported into the country effective July 1.

Trucks with load capacities of 3.5 tonnes and above will also be banned from the same date. Tractor heads and prime movers not older than three years will continue to be imported until June 2023 after which only new units will be allowed in.

The government is also 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 exempt 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 VAT of 16 percent, payable cumulatively and in that order.

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.

Assemblers import completely knocked down (CKD) parts which they put together at the plants located in Nairobi, Thika, and Mombasa.

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