Portugal Auto Firm Eyes Kenyan Base for Cheap Cars Factory

Posted on : Friday, 31st July 2020

Portugal-based auto-dealer is in conversation with a Kenyan assembler to initiate local production of low-cost Hyundai and Renault brands for sale across East Africa.

Salvador Caetano Group said, it is in discussion with unnamed local assembler as it wants to enjoy the tax benefit that comes with assembling cars in Kenya.Kenya Vehicle Manufacturer and Associated Vehicle Assemblers have been assembling locally for top brands like Mitsubishi, Scania, Tata Hino, Volkswagen and Toyota.

Caetano Kenya managing director Ezio Tuniz said the assembly of the two brands would ride on its recently introduced Sh350 million Kenya subsidiary on Mombasa Road in Nairobi that includes a showroom and an aftersales service bay.

“We are alive to the government’s policy that speeds up local assembly and collaborations with small and medium enterprises. We are examining the situation and will disclose our planned assembly plant investments in due course,” he said.

“Kenyans buy used family vehicles in big numbers due to their low pricing and we have done our evaluation that will inform the low-cost vehicles that we will gather locally.”

As a rule, Kenya exempts local vehicle assemblers from the 25 % import duty levied on fully-built imported vehicles. The incentive gives assemblers room to produce cheaper cars locally.

Kenya undermined what was once a thriving local assembly industry in the 1990s with policies that encouraged cheap second-hand imports. It is now looking to attract manufacturers back to help create jobs and support growth.
 

French carmaker Peugeot and Germany’s Volkswagen recently resumed car assembly locally, joining other brands based in Kenya including Toyota, Nissan and Mitsubishi.