Sh1.6 billion truck assembly plant opened in Nairobi

Last Updated 14 years ago by Kenya Engineer

A Chinese truck maker, Foton, has opened a Sh1.6 billion assembly plant in Nairobi as it prepares to increase its presence in the region. This move is expected to upset the balance of power in the new motor assembly industry, which has been dominated by brands like CMC Motors, General Motors and Toyota Kenya.

While presiding over the launch of the motor firm’s manufacturing plant in Industrial Area on Mombasa Road in Nairobi, Prime Minister Raila Odinga said the company will enjoy a 25 per cent tax-free incentive, which is usually slapped on fully assembled imported vehicles.

“Producing right here means the company will avoid paying a 25 per cent duty that is charged if it imports fully built units. That is the advantage Foton has just landed,” said the Prime Minister.

However, the company is set to face a tough market that prefers imported second-hand vehicles, due to their lower costs compared to brand new vehicle units.

“Pricing is responsible for consumers’ preference for second-hand vehicles, which currently command 70 per cent of the market share in East Africa,” noted the Prime Minister.

Foton EA, will however, stay clear of the Passenger Service Vehicles market because second-hand vehicles have the upper hand.

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