East Africa`s automotive industry
now gets busier
East Africa's automotive industry is
getting busier as new vehicle brands
enter the regional market in
anticipation for the economic boom
resulting from economic integration.
Data by consulting company
Pricewaterhouse Coopers (PwC)
indicates that the automotive
industry in Kenya and by extension
the East Africa has for long been
dominated by Toyota (East Africa) ,
Cooper Motors Corporation (CMC),
General Motors (GM), Simba Colt and
DT Dobie.
But other vehicle brands are digging
in, either establishing assembly
plants here or expanding their sales
network across the economic
community whose market is set to
expand with the independence of
South Sudan, East Africa
Community's planned sixth member.
For example, South Korean auto
maker Hyundai Motors on
Wednesday announced an
investment in East Africa of up to 22
million U.S. dollars in the next
three years through its subsidiary
Hyundai E.A. Holdings Ltd (HEA) to
support Hyundai auto sales in the
regions and make it easier to access
genuine Hyundai spare parts in the
region.
“Hyundai has been absent from East
African roads for over a decade. But
we consider the region as a
significant market and will be
making strategic investments to
make Hyundai cars the leading
models in the region,” said Sam Lee,
its regional Marketing Director.
The company opened its show room
in Nairobi in January. Last week, the
company partnered with a Kenyan
leasing company known as Vehicle
and Equipment Leasing Limited
(Vaell) as part of its strategy to
increase sales in East Africa.
“Our study of emerging trends in the
East Africa auto market found that
leasing is the fastest growing new
industry. As an aggressive new-car
seller, we see it as an enabler and
are happy to announce partnership
with local leasing company,” said
Lee.
China's vehicle manufacturer Foton
Motor has also set eyes on the East
Africa market and is now building an
assembly plant in Nairobi that will
supply at least 10,000 units to the
region, company officials said.
The new plant, which will give the
company competitiveness because it
means it will avoid paying 25 per
cent duty if it imported fully built
units, will assemble prime movers,
light commercial trucks, tippers,
buses, and pick-ups.
The company is currently in the
process of recruiting dealers across
the East Africa. Availability of spare
parts could be major win for the
company because consumer trends
here indicate that buyers go for
vehicles that they know they can buy
spare parts at the nearest town.
Earlier, India's Tata Motors said it
will establish a USD 12.8 million bus
assembly plant in the coastal city of
Mombasa to serve the East Africa
market.
The company had said it planned to
assemble up to 60 buses a month
although it was not clear if the
assembly has started operations.
Just like Foton, the intention is to
avoid the 25 per cent duty for the
buses to be competitively priced.
Toyota is also another global
automaker that announced last year
it plans to establish an assembly
plant in Kenya to serve the East
Africa market.
Martin Owour of the Advisory Center
for Trade and Investment Policy said
the race to set up assembly plants
in the country will result in lower
priced vehicles because of
competition and avoidind the 25 per
cent duty.
Price is a major issue in automotive
industry in East Africa and is blamed
for the consumer preference to
second hand vehicles that command
70 per cent of the automotive market
share in East Africa according to
various studies. ”The new
assemblers are looking to use Kenya
as the launching pad for entry into
the regional common market.
The fragmented economies of the
five East African countries had
discouraged the auto dealers from
setting up assembly plants, but the
common market has made it
possible for the dealers to capture a
region of more than 130 million
residents,” said Owour in an industry
analysis report.
Kenya currently has three motor
assemblers, Kenya Vehicle
Manufacturer, the Association of
Vehicle Assemblers Limited of
Mombasa and General Motors East
Africa.
The new assemblies will complement
efforts by the East African
Community (EAC) to encourage
setting up of automotive assembly
plants.
EAC industrialization strategy for
2010-2030 has identified Numerical
Machining Complex (NMC), Kenya's
state-owned company that once
manufactured two prototype vehicles
known as Nyayo Pioneer, as a
possible automotive assembly hub.
The company currently manufactures
some vehicle spare parts.
shared from www.expogr.com
