Isuzu East Africa has started assembling its D-Max pick-up trucks in Kenya, ending the tradition of importing readymade light commercial vehicles from South Africa.
Importing car parts and assembling them locally will give the company tax benefits that will allow the Kenyan unit to lower the selling price of its Isuzu D-Max pick-up trucks.
As a rule, dealers who assemble vehicles locally are exempted from the 25 percent import duty levied on fully-built imported vehicles, an incentive that gives room for assemblers to produce cheaper vehicles in Kenya.
“Our import tariffs are lower on the (knocked down) KD kits, we (will) create employment and we (will) positively influence employee and customer morale by assembling the Isuzu D-Max locally,” Rita Kavashe, MD of Isuzu East Africa, said in a statement.
An Isuzu D-Max Double Cab vehicle costs about Sh3.85 million, according to details on Isuzu’s website.
Isuzu is racing to lower this price to defend and gain market share in the increasingly competitive pickup vehicle segment. The firm’s top rival, Toyota Kenya, has also announced plans to start local production of its popular Hilux model.
Isuzu East Africa previously focused only on truck and bus assembly operations in Kenya while importing light commercial vehicles from South Africa.
Kenya undermined what was once a thriving local assembly industry in the 1990s with policies that encouraged cheap secondhand imports. It is now seeking to attract manufacturers back to help create jobs and support growth.
French carmaker Peugeot and Germany’s Volkswagen recently resumed car assembly locally, joining other brands already being put together in the country, including Toyota, Nissan and Mitsubishi.
Official data shows that the number of vehicles that were assembled between January and October last year increased 30 percent to 6,370 units.
However, sales of new vehicles in Kenya are still far outstripped by the importation of 80,000 used cars each year.
Imported from Japan or the Middle East, the used cars offer an affordable route to vehicle ownership and have dominated the market for decades.
Volkswagen, BMW, Toyota, Nissan and others have joined forces to lobby African governments to adopt steps that would reduce the imports and allow local production to flourish.
Motor vehicle dealers’ growing preference for local assembly is expected to create more jobs and reduce idle capacity at the three plants — Kenya Vehicle Manufacturer (KVM), Associated Vehicle Assemblers (AVA) and Isuzu East Africa.