The automobile industry of Kenya is defined as the key contributor of the country. Therefore, the importance of the automobile industry for the economy’s growth cannot be denied.
The GDP per capita is expected to grow as the demand for vehicles increases. There is no doubt that the country manufactures some of the finest quality vehicles despite the country’s challenges. Yes, despite manufacturing millions of vehicles each year, certain factors inhibit the growth of the automotive sector in the country.
The sales of the vehicles are expected to increase by 2025, which will strengthen the country’s economy too. Most people still prefer purchasing second-hand vehicles as their own industry is still under development.
If you are planning to buy a second hand car for sale in Kenya, then dive in.
Challenges
The automobile industry manufactures millions of vehicles each year. Some of the challenges are as follows:
1. The importation of second-hand vehicles is at large in the country. This leads to a decreased demand for new vehicles.
2. There is also a shortage of skilled workers who can cover several disciplines such as design, manufacturing, and several other programs. So, it gets quite difficult to manufacture the vehicles as per the desired ratio.
3. The acquisition of the latest technology and its spare parts can be a little difficult because of financial issues. Otherwise, the ratio at which the vehicles are being produced would increase.
4. Another challenge is that there is an adequate tax system on the automobile industry, so the local manufacturing of several parts is impossible.
5. The country’s tax policies do not allow the assemblers to source parts from other assemblers.
6. The absence of homologation has affected the market position of the vehicles.
7. Kenya does not have incentives to carry out further research within the automotive industry. So, innovation is hindered.
8. Moreover, the lack of finances remains a major challenge for the government and this hinders the growth of the automotive sector.
The Government is trying to frame new policies in order to increase the worth of the vehicles and promote their industry. Moreover, the automobile industry is working hard to overcome the challenges and manufacture excellent vehicles.
Automobile Market
Despite the challenges, you would be surprised to hear that Kenya’s Government is working hard to revamp its automobile industry. As the economy is growing, the country is trying to tackle the challenges.
The industry is all set to manufacture great vehicles, and there are a lot of motor vehicles operating in the country. This is enhancing the competition within the industry.
The market trends are fluctuating; Japanese car manufacturers dominate the automotive industry of Kenya. But sometimes Toyota loses its value, and according to the market reports, Peugeot is reported to be the favorite automobile company of Kenyans.
The market of Kenya is still small, but it has a lot of potentials, and in the coming years, it will grow more.
Kenyan people are likely to purchase a vehicle when favorable economic conditions. But, on the other hand, they also prefer purchasing vehicles from their own company Isuzu. Moreover, it is also estimated that the number of people purchasing Kenyan vehicles is likely to increase because the manufacturers are working hard to manufacture top-quality vehicles.
As the automobile industry of Kenya is still under development, people still prefer buying used Japanese vehicles.
Toyota motors, Peugeot, Honda motors are some of the famous companies whose vehicles are preferred by Kenyans.
Vehicle Numbers
More people in the country are buying vehicles, resulting in high levels of pollution. It is estimated that more than 70% of the vehicles are second-hand, and the total vehicle fleet is around 1.4 million units. The ratio is increasing much faster and is expected to increase.
By 2015, the number of newly registered vehicles and re-registered vehicles doubled, reflecting the strength of the automobile industry.
The reason for the sudden increase in vehicles was the increase in the demand for vehicles in the sectors such as tourism, retail, mining, etc. Also, the law enforcement agencies and the Government, in particular, are said to be the significant buyers of the vehicles.
In the light of this trend, there is no denying the fact that business fleets make up the major proportion of the total vehicle sales. So, the automobile company is working hard to ensure that it thrives as it is one of the country’s major industries.
As per the reports, in the year 2021, there was a 69% increase in the sales of the fleet. Therefore, this is a positive sign as Kenya is becoming the potential hub for the automotive production region.
The Production and Assembly
The automotive market of Kenya focuses on the retailing and distribution of vehicles. The small-scale assembly of a motor vehicle is done at three plants in cities such as Nairobi, Mombasa, and Thika. These plants are trying to tackle the challenges and improve the quality of their manufacturing parts to produce excellent vehicles.
There are some major automotive companies in Kenya that produce some of the finest quality vehicles. They are Trans Africa Limited and Associated Vehicle Assemblers (AVA), Kenya Vehicle Manufacturers, and Isuzu East Africa Limited. Moreover, these local companies are also working towards their customer services so the clients are satisfied with their purchases. In this way, people will prefer buying vehicles that are manufactured locally.
Commercial vehicles are mainly manufactured in the country, such as light pick-up trucks, buses, and heavy trucks. Moreover, the assembly of these vehicles is increasing day by day.
Moreover, a large number of non-genuine spare parts are manufactured in the country. Therefore, most Kenyans prefer buying second-hand vehicles because of the low cost. But, the average age of Kenyan roads is approximately fifteen years, which affects the second vehicle.
Policy Environment
The Kenyan Government realized the importance of the automotive industry because, without a doubt, it is the major driver of the economy. For this reason, new policies are being crafted.
The Government decided to develop a forty-hectare automotive, industrial park where the parts of vehicles are assembled. The incentives are given to encourage the locally assembled vehicles and the production of their parts too. Also, this will encourage the growth of the local industry too.
Moreover, it is also essential to establish a joint venture with an established automotive manufacturing industry. The Government is planning to domesticate the venture within ten years. There are plans of imposing high tariffs on the automotive parts so people would eventually buy local vehicles.
On the other hand, vehicles older than eight years are not allowed for import into the country. The industry effectively abides by the laws, so its automotive industry thrives. The local assemblers will be beneficial for the economy. So, the Government is encouraging the assemblers to carry new investments and research to manufacture extraordinary vehicles.
Also, the local assemblers will be awarded benefits such as low utility rates and extra export credits. Furthermore, the Government is working on devising the number of policies and allocating the finances. In this way, the automotive industry will bring more revenues. With all these efforts, Kenya has been recognized as the vehicle production hub by the EAC.
There are chances of the Government drafting policies on environment and health safety in the future. This will increase the worth of the vehicles manufactured in Kenya.
In addition to that, the framework aims to promote the industry as the country is stepping in the right direction.
Final Thoughts
Despite being a developing country, Kenya is taking proper measures to develop its automotive industry. However, there are several challenges that the country is trying to tackle to ensure the proper manufacturing of vehicles. Also, the demand for vehicles is growing, and the Government has realized the importance of the automotive industry for the economy.
The Kenyan Government has developed several policies to ensure that the automobile industry thrives. More laws will be coming in the future to ensure that the worth of the vehicles increases.
We can say that the automotive industry of Kenya will thrive in the future and will be in competition with some famous automobile companies.
