Market News

Chinese car maker Hawtai eyes local assembly

A model stands beside a Hawtai Motor’s B11 car. FILE PHOTO | NMG
A model stands beside a Hawtai Motor’s B11 car. FILE PHOTO | NMG 

Chinese luxury vehicle maker Hawtai Motors intends to open a local assembly line to cash in on China’s growing influence in the East African region.

Hawtai Motors described Kenya as a strategic location due to its inclusion in the Belt and Road (B&R) Initiative where Chinese funds have been spent on infrastructural projects—ranging from railways, roads and energy.

They include the Sh327 billion 500-kilometre Nairobi-Mombasa standard gauge railway.

“The company plans to raise the bar with both production and sales from 200,000 units in 2018 to 500,000 units by 2020, with its complete vehicles, automotive products, engines and gearboxes widely exported to more than 30 countries and regions,” said firm chairman Zhang Hongliang.

The statement indicated Hawtai Motors was keen on entering into a partnership with a local firm that will receive motor vehicle parts under a Knocked Down (KD) arrangement for assembly, distribution and sales.

“Hawtai Motor is taking advantage of the B&R initiative to promote its expansion to further expand into world markets by building a Chinese car brand with international competitiveness,” it said.

Other firms eyeing a slice of Kenya’s locally assembled vehicles market include French automaker Peugeot, India’s Tata and China’s Foton in 2019 while Germany’s Volkswagen is currently producing its Vivo Polo brand while Mobius is making inroads from the same Thika Kenya Vehicle Assemblers.

Nairobi-based Isuzu East Africa with its Isuzu and Chevrolet brands as well as the Changamwe-based Toyota bus assembly plant have been selling across East Africa thanks to friendly tax regimes across East Africa.

The 2017 gruelling electioneering period, however, witnessed a deep slump in new vehicle sales where only 11,000 vehicles were sold compared to 13,869 units last year and 19,996 units in 2015.

Local vehicle assembling cashes in on low ship freight charges for boxed cargo, enjoys a 10- year tax holiday to recoup investments, is exempt from excise duty and enjoys reduced import duty.