President Uhuru Kenyatta on March 9, called on the National Treasury and the Kenya Revenue Authority to immediately institute actions aimed at reducing taxes for vehicles that are fully assembled locally.
“Further, to make locally assembled vehicles more affordable and available to Kenyans, I have also directed that the National Treasury and the Ministry of Trade, Industry, and Cooperatives hold discussions with financial institutions to create special products for locally assembled vehicles,” he further stated during his address to the media outside State House, Nairobi.
Uhuru went on to unveil two of the first locally assembled Mahindra vehicles.
The Mahindra Scorpio Single and Double cabin pick-ups were assembled at the Associated Vehicle Assembly (AVA Kenya) plant in Mombasa -AVA is a wholly-owned subsidiary of Simba Corporation Limited.
Uhuru emphasised on the need for motor vehicle assemblers, in consultation with the National Treasury and the Ministry of Industry, to work out a mutually agreeable framework that will ensure the benefits accruing from the tax incentives are passed on to the consumer.
He then lauded Mahindra Motors, stating that the car manufacturer has joined the list of other globally renowned automotive brands that have chosen Kenya as their home such as Toyota, Peugeot, and Volkswagen.
Uhuru further disclosed that his administration had prioritized the local assembly of motor vehicles as a means of creating jobs and enhancing technology transfer.
“We appreciate your sustained investment in Kenya as it is a vote of confidence in our ever-improving business environment.
“This fact has encouraged my administration to continue to make every effort to revitalize the contribution of the manufacturing sector to the economy,” the President told the Simba Corporation leadership team that was led by Group Chairman Adil Popat.
The President challenged other sector players to take advantage of the refurbished AVA facility, which is currently producing 10,000 units annually, to increase their production.
“This is important to us, as it will create more opportunities for our people through employment, facilitate the growth of associated downstream industries and encourage even more investments, not only in this sector but in others as well,” Uhuru declared
AVA currently assembles vehicles for 10 vehicle manufacturers and is certified and endorsed by 20 global manufacturers.
At the beginning of 2019, the government proposed to implement a National Automotive Policy which effectively would see an eventual ban on imports of second-hand passenger and commercial vehicles.
However, this was faced with stiff resistance from the used car industry with the government eventually having to suspend their push to change the regulations on May 7, 2019.
Data from Kenya’s Road Transport reported that there were 3,280,934.000 registered car units in Dec 2018, which was an increase from the previous number of 2,989,788.000 units for Dec 2017.
According to the Kenya National Bureau of Statistics (KNBS), a middle-class Kenyan is anyone who spends between Ksh23,670 and Ksh199,999 a month, which sees them well placed to take full advantage of the effects of tax cuts in the motor vehicle industry.
However, it is important to note that a recent economic survey by KNBS (2019) states that loans and advances from banking institutions increased by 12% to Ksh442.3 billion in 2018 from Ksh358.6 billion in 2017, which could imply that this specific class -identified with massive spending, may be borrowing to sustain their lifestyles.
Other attendees at the colourful State House event were, Head of Public Service Joseph Kinyua, Inspector General of Police Hillary Nzioki Mutyambai, his deputy Edward Mbugua and Trade, Industry, and Cooperatives CS Betty Maina.
