The world’s biggest auto maker, the Toyota Corporation, has announced it will invest Sh3.1b (US$35m) in Kenya to establish a regional vehicle, equipment and parts distribution centre with an expanded vehicle local assembly in the country by the end of the year.

The Japanese auto maker disclosed it plans to buy a 50% stake in a local motor vehicle assembly company, whose plant will be upgraded and expanded to improve its production capacity.

The upgrade according to the Chairman of Toyota Kenya, Ambassador Dennis Awori, will enable the automaker reintroduce its fleet of Hilux range of pick ups as well as additional models of its brand of Land Cruiser vehicles.

The company intends to further expand the models assembled locally to include left hand drive vehicles for sale in regional countries including Rwanda, Burundi, Sudan, Ethiopia, Eritrea and Djibouti.

Awori who addressed a meeting hosted by Industrialization PS Karanja Kibicho reently said Toyota has a comprehensive investment plan for Eastern Africa covering several sectors including energy and agriculture.

And based on this, Toyota he added, expects to have a turnover of more than Sh8.9b (US$ 100m) in Kenya per year.
The PS expressed the Government’s commitment to facilitate investment and expansion of industries in the country.

Awori and a team from the Toyota Nairobi office were in the Ministry to seek an interpretation on the Kenyan Standard for Motor Vehicles (KS1515) which regulates the importation of certain components of the completely knocked down kits (CKDs) they will be importing to assemble in Kenya.
He urged Toyota to encourage participation by local investors in the vehicles they assemble in the country by sub contracting smaller local industries which have the capacity to produce quality products to provide various components of the vehicles they would assemble.

By subcontracting, the PS noted, that motor vehicle assemblers in the country support a number of companies supplying local parts such as tyres, springs, electrical harnesses, bus, truck and pick up bodies, steel, batteries as well as exhaust systems.

By assembling affordable vehicles locally, the PS said Toyota would help bring harmony to the models of motor vehicles in the local market and hence effectively support the products during service.

Kibicho noted that vehicles designed and engineered for local operating conditions, with proper after sales support, significantly reduce downstream costs of ownership, making locally assembled vehicles the cheaper option in the long run.

He asked Toyota to explore the possibility of manufacturing cheaper vehicles for the local and regional markets adding that Kenya alone imports more than 150, 000 used saloon cars every year.

The PS said the Ministry had notified the relevant authorities of the left hand vehicles to be assembled here for sale in other countries saying it is considered that such business will not contravene KS 1515: 2000 which prohibits the import of such vehicles into the country.

Source: http://www.busiweek.com/11/opportunities/1382-toyota-plans-35m-kenya-parts-centre 

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