Nissan Motor Co. Ltd. is eyeing a piece of Kenya's multi billion car industry and is planning to start assembling vehicles in Kenya.
Nissan Motor Co. Ltd. is the latest to entrant to Kenya and follows the tail lights of Volkswagen AG, PSA Peugeot and CNH Industrial NV who have set assembly lines in the country in the past 18 months, bloomberg reported.
Nissan will initially put together pick-up trucks from semi-knocked-down kits, or SKDs, if the government agrees to waive a 25 percent import tax, according to Jim Dando, director of Africa operations for Nissan.
“We’re prepared to enter Kenya as an SKD assembler,” Dando said by phone from South Africa’s capital, Pretoria. “We’re keen to move quite fast. We want to make this happen.”
Outside South Africa and Nigeria where the auto maker has assembly lines, there isn’t much automotive action going on in the continent because of challenges such as the volume of imported used cars, few vehicle-financing options and a patchy road network but it seems Kenya wants to join the big boys club.
In recent years the government has open up the economy, created a national trade policy and announced number incentives all in an effort to position the country favorably in investors eyes.
Manufacturing is one of President Uhuru Kenyatta big four pillars.
Nissan will submit a proposal to the government once market studies and due diligence assessments are complete, and may have an operational assembly line by the end of 2019 if it receives a green light.
The company would work at an established plant, which would cost it about $20 million, rather than setting up its own facility, Dando said.
Investing in an existing plant for completely knocked-down kits, or CKD, would require as much as $100 million while a new factory would cost double that amount.
Nissan prefers starting with half-finished vehicles as it builds market share and a skilled workforce, Dando said.
Nissan executives are considering processing their vehicles at plants owned by Isuzu East Africa Ltd., Associated Vehicle Assemblers Ltd., which belongs to Simba Corp., and Kenya Vehicle Manufacturers, a venture between the government, Toyota Tsusho Corp. and Al-Futtaim Group, Dando said.
Once established, the Kenyan facility will feed the Eastern Africa market, which is currently served by imports of light trucks from South Africa with other models coming from Japan.
The decision to begin assembling 1-ton pick-up vehicles is because Kenya’s new-vehicle market is dominated by light commercial trucks. One-ton single-cab trucks made up almost 12 percent of all new purchases in Kenya last year, according to the Kenya Motor Industry Association.
The facilities could cut new-vehicle costs to customers in some of the continent’s fastest-growing economies, where vehicle ownership per thousand people is about a quarter of the global average.
Nissan is also “looking cautiously” at Zimbabwe and Ethiopia as potential countries for local assembly, but has no timelines and is yet to make decisions on those markets.