Government incentives have helped boost vehicle production in Kenya with more than 10,000 finished vehicles assembled there last year, according to the Kenya National Bureau of Statistics.
Its Economic Survey 2016 reported a 6.8% rise in 2015 compared to the previous year in Kenya’s production of cars, trailers and semi-trailers. This includes a 7% rise in the number of motor vehicles assembled there, from 9,514 to 10,181 vehicles; a 13.2% hike in production of trailers and semi-trailers; and a 1.3% increase in terms of motor vehicle bodies.
Government incentives that have helped boost production include an exemption on imported parts for assembly from the 25% import duty that applies to finished vehicles. Last year, the government also guaranteed a minimum of 40% of the state's annual vehicle leasing contracts would go to Kenyan motor vehicle assembly firms.
In 2010, the Kenyan government introduced a motor vehicle leasing policy for all automotive acquisitions in place of outright purchase, to reduce upfront acquisition costs and keep spiralling maintenance costs in check.
In 2014, state agencies leased in the region of 3,000 vehicles, though at that time no distinction was made between locally assembled and imported units. In 2015, however, the Treasury announced it would establish structures for better motor vehicle fleet management, covering both leased and government-owned motor vehicles, suggesting this was “expected to encourage motor vehicle assembling, support growth of backward and forward industries, boost the secondary market of vehicles and generate additional employment opportunities”.
As of July last year, the government began leasing 800 more vehicles for the National Police Service. A further 500 vehicles are expected to be leased as of July this year.
Vehicle manufacturers including Associated Vehicle Assemblers (AVA), General Motors East Africa and Kenya Vehicle Manufacturer (KVM) have all reported that there is sufficient capacity for yet further increases in assembly there.
Meanwhile, the government is currently trying to curb the number of imported second-hand vehicles. In December, the Treasury introduced a $2,000 excise tax for vehicles more than three years old with a $1,500 tax for newer ones.
In March this year, Daimler Trucks Asia began assembly of its Fuso range of commercial vehicles at a plant in Mombasa, Kenya, with its local partners Simba Colt and Associated Vehicle Assemblers.
