KVM sets up assembly of Africa’s cheapest car

Last Updated 13 years ago by Kenya Engineer

Mobius Motors who guaranteed to build new cars each worth Ksh525, 000 ($6,000) for African roads has started assembling at the Kenya Vehicle Manufacturers (KVM) in Thika.

Mobius Motor’s Chief Executive Officer (CEO), Computer engineer, Joel Jackson is the mastermind behind the car dubbed Mobius.  KVM has started the assembly of five units, supported by parts from Toyota. The Thika-based assembler plans to increase the production to more than 500 units by mid next year.

“We started assembly of Mobius two weeks ago. We are building five prototypes and the units under production will grow to more 500 cars next year depending on sales between now and December,” said Ralph Hruschka, the quality manager at KVM.

The car is optimized for rugged roads, with large versatile loading space, efficient fuel consumption and easy maintenance. Mr. Jackson during a recent interview with Reuters said that the firm which had 24 employees in May had raised millions of dollars of investment to scale up production. The firm’s choice of Kenya is set to boost activities in the local assembly business which has been riding on tax exemptions.

The imports of vehicle parts is exempted from the 25 percent tax levied on fully built units, helping dealers to churn out cars at reduced prices.

Currently, over 35% of the vehicle cost is sourced domestically within Kenya. Longer term, we’re working with Kenyan suppliers to increase local content beyond 40%.

“By locally sourcing more supplies and expanding our assembly capabilities in Kenya, we plan to not only drive down the cost of the car but also help strengthen a domestic automobile industry and create thousands more skilled jobs,” said Mr. Jackson in the interview.

KVM is facing cash flow problems that saw to it reducing its staff to 100 from 240 last year.

“We are looking for new businesses like Mobius since we have built 900 units over the past year compared to about 2,000 units last year against our capacity of 6,600 cars,” said Mr. Hruschka.

The Thika-based assembler is owned 35 per cent by the Treasury, DT Dobie (32.5 per cent) and CMC (32.5 per cent). KVM’s outlook was worsened by the end of the contract to assemble Land Rover Defender models after the franchise of the brand was taken from CMC and handed to rival firm RMA.

Data from Kenya National Bureau of Statistics (KNBS) shows that car dealers have reduced their enthusiasm to assemble vehicles locally after they cut production in the first quarter of 2013 by 14.6 per cent to 1,597 vehicles.  Whereas the  sale of new cars rose by 8.2 percent to 4,109 cars, evidence  that local dealers are increasingly importing fully built cars and shifting assembly to other markets like South Africa, especially General Motors East Africa, another Vehicle assembler.