Steve Umidha @steveumidha
Kenya’s motor vehicle industry is expected to grow by 15 per cent this year following a difficult period that was largely characterised by low sales in 2017. According to Kenya Motor Industry Association (KMI), dealers could witness an upsurge in the number of new vehicles sold locally this year, owing to enhanced government interventions and condensed political activities.
Key among the factors hoped to improve the sector include recent remarks by Industrialisation Cabinet Secretary Adan Mohammed, who said that the government will further slash age limit for imported cars from the current eight years to five years, in a host of incentives intended to promote local vehicle assembly.
Also on the cards are tax reforms proposed by the National Treasury to slash by half corporate tax for local car assemblers. Despite the decline of 21 per cent last year, KMI gives an upbeat outlook, pointing towards an improvement this year with its chairperson Rita Kavashe saying such incentives will grow the sector by 15 per cent.
“Last year’s low sales were as a result of elections but this year we expect things to be different. We expect the market to grow by at least 15 per cent this year,” said Kavashe. Other players like Simba Corporation are voicing similar sentiments, saying the industry has the potential to grow to the levels witnessed in 2016 and 2015, with the latter period seeing 19,553 vehicles sold.
“The last two years were not good for the industry, but we believe this year could be better, but this will be dependent on interest rate capping – if something is done about it. If reviewed then we could see double-digit growth of at least 10 per cent,” said Simba Corporation Group chief executive Dinesh Kotecha.
Last year, the industry endured the brunt of negative consumer sentiment especially in the commercial segment, with most firms apprehensive to spend on buying new vehicles as well as entering leasing contracts.
The banking law that capped interest rates is further blamed to have played a role that hampered the industry’s growth. Several vehicle dealers like Swedish brand, Volvo, French car maker, Peugeot among other car brands have started local assembling with a target to reap from the growing industry.
German car maker, Volkswagen which set up in 2016 announced last month that it is looking to double production of the VW Polo Vivo to at least 300 vehicles at its Thika-based plant while at the same time exploring producing a second model.