Nissan has announced its intention to invest about USD 20 Million ( Ksh. 2 Billion) in setting up a vehicle assembly facility in Kenya.
Mr. Jim Dando, Nissan South Africa’s Director of Operations said that “We’re prepared to enter Kenya as an SKD assembler,” . He further reiterated that Nissan was keen to move quite fast.
Outside of South Africa, there isn’t much automotive manufacturing on the continent because of challenges such as the volume of imported used cars, few vehicle-financing options and a patchy road network. In Kenya, sales of new units fell 20% last year to 11 044.
Nissan will initially put together pick-up trucks from semi-knocked-down kits, or SKDs, if the government agrees to waive a 25% import tax, according to Jim Dando, director of Africa operations for Nissan.
“We’re prepared to enter Kenya as an SKD assembler,” Dando said by phone from Pretoria. “We’re keen to move quite fast. We want to make this happen.”
Volkswagen, which returned to Kenya last year after a four-decade absence, is producing its Polo Vivo model from SKD kits.
Nissan will submit a proposal to the government once market studies and due diligence assessments are complete, and may have an operational assembly line by the end of 2019 if it receives a green light. The company would work at an established plant, which would cost it about R241 million, rather than setting up its own facility, Dando said.
Investing in an existing plant for completely knocked-down kits, or CKD, would require as much as R1.2 billion while a new factory would cost double that amount. Nissan prefers starting with half-finished vehicles as it builds market share and a skilled workforce, Dando said.
Nissan executives are considering processing their vehicles at plants owned by Isuzu East Africa, Associated Vehicle Assemblers, which belongs to Simba Corp., and Kenya Vehicle Manufacturers, a venture between the government, Toyota Tsusho and Al-Futtaim Group, Dando said.
Once established, the Kenyan facility will feed the Eastern Africa market, which is currently served by imports of light trucks from South Africa with other models coming from Japan. In addition to its plant in South Africa, Nissan has an assembly line in Nigeria.
The decision to begin assembling 1-ton pick-up vehicles is because Kenya’s new-vehicle market is dominated by light commercial trucks. One-ton single-cab trucks made up almost 12% of all new purchases in Kenya last year, according to the Kenya Motor Industry Association.
While there’s great potential in the passenger-vehicle category the segment is inundated with cheaper second-hand imports, Dando said. Public-transport vehicles in Kenya are colloquially known as Nissan no matter their make, as the first imports of the privately owned minibuses in the early 1990s were usually used models from Japan.
Nissan is also “looking cautiously” at Zimbabwe and Ethiopia as potential countries for local assembly, but has no timelines and is yet to make decisions on those markets. Many African economies have hit a rough patch, making them unattractive as manufacturing bases, Dando said.
“There isn’t much scope in Africa to start an assembly plant” in addition to those it already has beyond Kenya currently, he said.