Simba in talks with car makers
Simba Corporation, a closely held Kenyan firm, is in talks with four car makers, including Renault, to assemble their vehicles in that country.
Simba Corporation, a closely held Kenyan company, is in talks with four car makers including Renault of France about assembling their vehicles in East Africa’s biggest economy.
The manufacturers are seeking to tap demand in an industry that is expected to grow 15% in 2018, CEO Adil Popat said.
Another of the companies interested in making its vehicles in Kenya is Mahindra and Mahindra of India, he said, declining to identify the other two firms.
The four incoming firms would add to the growing number of car manufacturers targeting Kenya after Volkswagen, Peugeot, CNH Industrial and Nissan announced plans for assembly lines in the country in the past 18 months.
Vehicle production is expected to expand more than 14% annually in the next four years, propelled by expanding local demand and improving export opportunities, Fitch Group’s BMI Research said in January.
The car makers are seeking assurances from Kenya’s government on tax incentives and a commitment to gradually phase out imports of second-hand vehicles to guarantee the viability of local assembly, Popat said.
The country’s industrialisation ministry is considering a new motor-vehicle policy that stipulates tax breaks and age limits for imported used cars. The new legislation will be published for public review in June, said principal secretary for industrialisation Betty Maina.
“Our intention is to support local assembly, both commercial and passenger vehicles,” she said. “The industry has been involved in this policy, so we hope to have it adopted by cabinet as soon as possible.”
Simba owns the Mombasabased Associated Vehicle Assemblers, a contract assembly plant that produces light and heavy trucks for companies such as Toyota and Hino Motors of Japan, Tata Motors of India and South Korea’s Daewoo, Mitsubishi Fuso Truck & Bus Corporation, Scania and Foton Motor Company.
New vehicle sales slumped 20% to 11,044 in Kenya in 2017, when a dispute over the outcome of an August presidential election and a rerun in October ground the economy to a halt. While the market had got off to a “slow start”, sales were expected to pick up, driven largely by government orders, Popat said.
Simba’s vehicle unit makes up 85% of the company’s total revenue, Popat said. The unit includes Simba Colt Motors, which holds the franchises to sell vehicle brands including Mitsubishi Fuso, Mahindra, Renault and BMW.
Popat said plans to list Simba on the Nairobi bourse were part of its strategy and would be clearer once the restructuring of the business was completed by the end of 2018.
THE INDUSTRY HAS BEEN INVOLVED IN THIS POLICY, SO WE HOPE TO HAVE IT ADOPTED BY CABINET AS SOON AS POSSIBLE VEHICLE PRODUCTION IS EXPECTED TO EXPAND MORE THAN 14% ANNUALLY IN THE NEXT FOUR YEARS