Nissan Motor Co. Ltd. plans to begin badembling vehicles in Kenya, reinforcing the government's plans to develop a regional center for automatic manufacturing in the Greater East African economy.
The Japanese automaker is the last destination in Kenya after Volkswagen AG, PSA Peugeot and CNH Industrial NV announced plans for badembly lines in the last 18 months. The facilities could reduce the costs of new vehicles to customers in some of the continent's fastest-growing economies, where vehicle ownership per thousand people is about a quarter of the world average.
Outside of South Africa, there is not much automotive manufacturing on the continent due to challenges such as the volume of imported used cars, few vehicle financing options and an irregular road network.
Nissan will initially bademble semi-downed kits, or SKDs, if the government agrees to waive a 25 percent import tax, according to Jim Dando, Africa's director of operations for Nissan.
"We are ready to enter Kenya as an SKD badembler," Dando said by telephone from the South African capital, Pretoria. "We are willing to move fast enough, we want this to happen"
Volkswagen, which returned to Kenya last year after an absence of four (19659011) years, is producing its Polo Live model of SKD kits .
Nissan will submit a proposal to the government once market studies and due diligence evaluations are complete, and may have an operational badembly line by the end of 2019 if it receives a green light. The company would work at an established plant, which would cost about $ 20 million, instead of establishing its own facilities, Dando said.
Investing in an existing plant for completely destroyed kits, or CKD, would require as much as $ 100 million, while a new factory would cost twice that amount. Nissan prefers to start with half-finished vehicles, as it increases its market share and skilled labor, Dando said.
Nissan executives are considering processing their vehicles at plants owned by Isuzu East Africa Ltd., Associated Vehicle Assemblers Ltd., owned by Simba Corp. and Kenya Vehicle Manufacturers, a government-owned company, Toyota Tsusho Corp. and Al-Futtaim Group, said Dando.
Once established, the Kenyan facility will feed the East African market, which currently receives imports of light trucks from South Africa with other models from Japan. In addition to its plant in South Africa, Nissan has an badembly line in Nigeria.
One ton trucks
The decision to start badembling 1 ton vehicles is because the new vehicle market in Kenya is dominated by light commercial trucks. Last year, one-ton trucks with a single cab accounted for almost 12 percent of all new purchases in Kenya, according to the Kenyan Automobile Industry Association.
Although there is great potential in the pbadenger vehicle category, the segment is flooded with handheld imports, Dando said. Public transport vehicles in Kenya are colloquially known as Nissan regardless of their brand, since the first imports of private minibuses in the early 1990s were generally used models from Japan.
Nissan also "looks cautiously" at Zimbabwe and Ethiopia as potential countries for local badembly, but has no timetable and has yet to make decisions about those markets. Many African economies have reached a difficult point, making them unattractive as manufacturing bases, Dando said.
"There is not much field in Africa to start an badembly plant," in addition to the ones it already has beyond Kenya today, he said. .