KENYA – Simba Corporation, an integrated business group, is set to assemble Malaysian car brand Proton in Kenya starting November, aiming to attract price-sensitive middle-class buyers with prices as low as KSh1 million (US$10,000) inclusive of taxes.
This will expand the list of passenger cars assembled in the local market, joining Volkswagen Polo Vivo (by DT Dobie) and Peugeot (Urysia). Assemblers are increasingly taking advantage of tax incentives offered to firms producing locally.
Simba’s chief executive Dinesh Kotecha told Business Daily that the company has signed an agreement with Proton Holdings and the first shipment of the car parts has already departed for Kenya.
“We will start assembling the Proton cars at our plant AVA (Associated Vehicle Assemblers) in November,” Mr Kotecha said.
“We are targeting people who would have bought used cars. The prices will start from US$10,000 (KSh1 million) inclusive of taxes,” he said.
Imports of fully-built vehicles are charged an import duty of 25 percent while completely knocked down (CKD) parts headed to assembly plants are exempt from this tax.
Simba plans to sell about 5,000 units of the cars each year. Proton manufactures several car models including sedans, hatchbacks and SUVs.
Simba is betting that the lower prices will attract professionals and small business owners who have preferred to buy second-hand cars that are cheaper because of depreciation.
Formal dealers like Simba and DT Dobie see the combination of the low prices and warranty (of up to three years or 100,000 kilometres) as winning buyers for their budget car line-ups.
The government has also pledged to prioritise purchase of vehicles assembled locally as part of incentives to attract more global automakers. The government last year also banned the imports of used trucks with load capacities of 3.5 tonnes and above.
Local assembly is seen as critical in creating jobs and skills transfer. Isuzu East Africa, AVA and Kenya Vehicle Manufacturers (KVM) are the major assemblers in the country.
They have mostly produced commercial vehicles –buses, trucks and pick-ups— over the decades as most passenger cars were shipped in fully-built as new or used models.