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AFFORDABLE OPTION: Chinese cars are significantly less expensive than their competitors |
Foton Motors East Africa Ltd. is investing $10 million in an automobile assembly plant in Nairobi at a time when Chinese vehicles are making inroads into Kenya.
As relations between Nairobi and Beijing are improving, China is increasingly expanding its economic footprint in the country in line with the Kenyan Government's policy to look east for new investments and aid.
The plant is one of the biggest Chinese investments in Kenya and will produce Foton automobiles that are challenging the new motor vehicles market dominance of Japanese and Western models, due to low pricing.
Foton's head of marketing, Emma Mugambi, said 10,000 units of prime movers, tippers, buses, pick-ups and light commercial trucks will annually be produced after the assembly plant is completed by August 2012.
"We are targeting the regional market in East Africa. Completely knocked down (CKD) units for local assembly are zero-rated as opposed to imported fully made vehicles that have 25 percent import duty," she said
Various Foton models have gained popularity because of their reliability, durability, low maintenance costs and fuel efficiency. The new vehicles cost about 30 percent less or are about half the price of the competition's.
The Foton 4-ton light truck and Tunland double-cabin pick-up retail for Sh1.9 million ($22,900) and Sh2.8 million ($33,400). Similar brands cost Sh3.5 million ($42,200) and Sh3 million ($36,100) to Sh4 million ($48,200).
About 12,000 units with various models from Toyota Kenya, General Motors, D. T. Dobie, CMC Motors Group and Simba Colt Motors are sold in 2011 and they also faced stiff competition from Chinese brands.
Chery on top
Stantech Motors Ltd. in Kenya is the franchise dealer of Chery Tiggo sports utility vehicle and Grandtiger high-end pick-up, respectively of Chery International Automobile and ZX Auto of China.
"We have sold over 300 units and aim to capture a larger market by offering affordable new vehicles of innovative engineering, design and manufacturing quality," said Stantech Motors Executive Director Justus Nguu.
Nguu said Stantech is looking for ways to raise brand visibility in East Africa as the firm has established service centers and dealers in Nairobi, Nakuru, Kisumu, Mombasa and Eldoret to offer affordable genuine spare parts.
China's Chery Tiggo retails for Sh2.8 million ($33,374) while competing brands go for about Sh5.2 million ($62,650). Chery International will watch the performance of Foton's assembly plant in Kenya before setting up a similar facility.
Chery International has CKD factories in Egypt, Iran, Russia, Brazil, Indonesia, Uruguay and Syria among others. The vehicles are exported to Libya, Sudan, Ethiopia, Ghana, South Africa, Algeria, Australia and Europe.
Nguu said Stantech has a vehicle leasing arrangement for Chery Tiggo as well as the Grandtiger double-cab pick-up, which has a collapsible buffer zone that protects the driver/passengers in case of an accident.
ZX Auto, the manufacturer of Grandtiger pick-up, sells the vehicle to South Africa, Libya, Algeria, Egypt, Senegal, Sudan and Mali, as well as Australia, Brazil, Chile, India and Syria among other countries.
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