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Forty Years Ago, Kenya Aspired To Become Major
Vehicle Assembler For The East African Region …

Coastweek -- Kenya and indeed all of the East African countries have become a very strong used car market with the main supply source being Japan and the Middle East, writes Teti Kamugunda.

Though the latter is a major source, most of the cars that come from the Middle East are of Japanese origin.

Forty years ago, there was a big buzz in Kenya when local vehicle assembly started.

The first company was General Motors East Africa (GMEA) and was quickly followed by Kenya Vehicle Assemblers in Thika (or KVM) and Associated Vehicle Assemblers (or AVA as it has become popularly known).

These companies started operations within a space of two years of each other.

The aspiration then was that Kenya would become a major vehicle assembler not only for Kenya but also for the whole of the East African region.

At that time the East African Community (phase one) was coming along strongly as was the main drivers in setting up of these plants.

South Africa as still under apartheid rule and Kenya was seen as the best entre to serve East and Southern Africa.

Local content very quickly grew with window glass, seat cushions, wiring harnesses, batteries, tyres and paints rapidly establishing themselves as the mainstay of the local content development.

This was largely achieved by international organisations partnering with existing smaller local companies.

In some of the other instances, international organisations established manufacturing facilities in the country which have since become locally owned or having a majority local shareholding.

The vehicle assembly business grew rapidly as the middle class in Kenya and in East Africa developed.

The mainstay of the assemblers were popular mid sized passenger or private vehicles such as Toyota Corollas, the Datsun range from Nissan, Isuzus and the ubiquitous Land Rover.

They also assembled trucks and buses and partnered with various body-building companies to customise for the local and regional market.

There were also customisations made.

The most popular was the Datsun pick up that came to know as the Datsun Debe because of its utilitarian nature.

Others to be customised included the quaint Renault 4L (Quatrelle) which was renamed the Renault Roho.

However, the first a dent in growth was when the EAC collapsed and tariff protection started on exports trade between the three countries that were the then members of the EAC.

The next major blow to vehicle assembly in Kenya was the start of large-scale importation of second hand vehicles into Kenya.

At the start there were punitive tariffs on importation of fully assembled vehicles including second hand vehicles.

However through “hook and crook” the restrictions on the importation of second hand vehicles was eased and they began to flood the market.

It started with imports from the Middle East and eventually from the source pool in Japan.

This single accommodation by the governments in Eastern Africa dealt a cruel blow to the high potential assembly plants.

Most were kept going on a shoestring by assembly of trucks, buses and utility vehicles that were mainly targeted at the government and service companies.

GMEA became dominant in the transport sector with a strong focus on small and medium size buses.

The Isuzu range has been the mainstay of the matatu business alongside imported but mainly second hand Toyota and Nissan microbuses.

After a long time in the doldrums there have been key pronouncements in the last few months heralding a return of assembly of models aimed at the lower to middle end of the market in East Africa.

The first was Volkswagen which announced its return to assembly in Kenya after almost forty years. It will start by assembling the Volkswagen Vivo at the KVM plant in Thika.

The next to announce a return was Peugeot who will assemble a mix of vehicles probably at the AVA plant in Mombasa which has traditionally had Peugeot as a major client especially in the hey days of the 504.

This vehicle formed the bulk of government purchases for along time – in fact till the marque was withdrawn from the range.

This return of some of the large names to Kenya should be a signal to the government that there is a great opportunity to further create jobs in the country but only if the right policies are put into place to encourage and protect investment.

The motor industry has been through the cycle of early promise to encourage investment followed by a short lived growth before partisan, selfish or downright corrupt interventions have killed growth.

Let us wait and see what kind of support this new interest in motor vehicle assembly in Kenya will get.

Is it support for the headlines because of big event later this year or is it sustained support that will last through several policy cycles.

As Kachumbari says, the proof of the pudding is in the eating (sic) !

Remember: you read it first at coastweek.com !


 

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