Kenyan SUV maker Mobius Motors Kenya Ltd winds up business after 13 years

Liquidation refers to the process of converting assets into cash or cash equivalents, typically to settle debts or distribute funds.

The decision was made during a shareholders' meeting held on August 5, 2024, as per Section 393(1)(b) of the Insolvency Act, 2015.

The shareholders resolved to appoint KVSK Sastry as the liquidator to oversee the winding-up of the company.

A meeting of the creditors is scheduled for August 15, 2024, at 9:00 am at the Mobius Factory located at Sammer Africa, Mombasa/Enterprise Road Junction, Nairobi.

Kenyan SUV maker Mobius Motors Kenya Ltd Kenyan SUV maker Mobius Motors Kenya Ltd Pulse Live Kenya

The purpose of the meeting is to consider and potentially pass a resolution approving the appointment of the liquidator as nominated by the shareholders, in accordance with Section 408 of the Insolvency Act.

Additionally, a list of the company's creditors and proxy forms will be made available for inspection on August 9, 2024, at Mobius Motors' office in Block C3, Sameer Business Park, Mombasa Road, Nairobi.

This inspection will be free of charge, providing creditors and other stakeholders an opportunity to review the company's financial obligations.

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Implications and Background

The voluntary liquidation of Mobius Motors marks a significant turning point for the company, which has been a key player in Kenya's automotive industry.

The decision to enter liquidation suggests that the company faced insurmountable financial challenges, leading to the inability to sustain its operations.

Mobius Motors, founded in 2010 by Joel Jackson, emerged from a vision to create rugged and affordable vehicles tailored for the challenging terrains of Kenya.

The company was incorporated in the UK and registered in Kenya

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Early Development

The inception of Mobius Motors can be traced back to Jackson's visit to Kenya, where he identified a significant gap in the market for durable vehicles suitable for rural areas.

This realisation led him to assemble a small team, dedicating ten months to research and development, resulting in the creation of the Mobius I prototype.

This initial vehicle, characterised by its tubular steel frame and off-the-shelf components, was designed to navigate both urban and rural roads effectively.

Growth and Production

In 2012, Mobius Motors secured its first round of funding, enabling the development of the Mobius II, which was launched in 2014.

First generation Mobius II in 2014 First generation Mobius II in 2014 Pulse Live Kenya

This model featured improvements in design and engineering, although it maintained a minimalist approach, lacking many modern car amenities such as power steering and GPS navigation.

Despite these limitations, the Mobius II sold about 50 vehicles by mid-2016. The company operated from various locations, eventually establishing its headquarters in Nairobi at Sameer Business Park.

Expansion

Following the Mobius II, the company shifted its focus to scaling production. In early 2018, Mobius Motors raised Sh500 million from the United States Overseas Private Investment Corporation (OPIC).

This investment facilitated plans for a new manufacturing facility in Nairobi, which would become the first complete assembly plant for passenger vehicles in East Africa.

The second generation of the Mobius II was later released.

Mobius II Mobius II Pulse Live Kenya

Mobius Motors officially announced the Mobius III on August 19, 2021, with a starting price of Sh3.9 million.

The company began accepting pre-orders for the vehicle, requiring a deposit of Sh50,000.

The Mobius III was positioned as a competitive alternative to imported SUVs from Japan and China, appealing to customers who prioritise both style and utility.

READ: List of vehicles manufactured in Kenya & their prices

Mobius III Mobius III Pulse Live Kenya

Mobius Motors Sh73 million tax dispute with KRA

Mobius Motors has been embroiled in a significant tax dispute with the Kenya Revenue Authority (KRA), which has presented serious challenges to the company's financial stability.

The core of the dispute revolves around a tax bill amounting to Sh73 million that KRA demanded from Mobius, which the company claims it could not afford to pay without risking insolvency.

Background of the Dispute

The tax dispute began when KRA issued a demand for taxes related to various services and expenses incurred by Mobius, including withholding tax on software purchases and consultancy services.

Mobius contested the amount, asserting that it only owed KRA Sh12 million and proposed to pay this in installments.

In contrast, KRA insisted on the full amount, including penalties and interest, which brought the total claim to around Sh85 million.

KRA headquarters in Times Towers Nairobi KRA headquarters in Times Towers Nairobi Pulse Live Kenya

Court Proceedings and Outcome

In response to the tax demand, Mobius Motors sought court protection, arguing that the enforcement of KRA's tax claim would lead to substantial financial loss and could potentially force the company to shut down.

In July 2020, the High Court granted Mobius a reprieve by suspending KRA's demand for the tax payment, contingent upon the company providing a bank guarantee of Sh40 million within 60 days.

This decision was made by Justice Francis Tuiyott, who acknowledged the financial strain Mobius was under, as evidenced by its audited financial reports showing significant liabilities and shareholder deficits.

File image of a KRA office Pulse Live Kenya

The court's ruling effectively halted KRA's ability to execute the tax tribunal's decision, allowing Mobius to continue operations while it appeals the tribunal's ruling.

The company demonstrated that it had incurred substantial losses in previous years, which supported its claim of financial vulnerability.

As of August 2020, Mobius Motors reported liabilities exceeding Sh649 million and a shareholder deficit of Sh389 million.

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