Car in front may be a Tiger… in five years

In five short years, Chinese vehicles could dominate Kenyan roads, especially in the saloon and pickup categories, according to Stantech Motors executive director Justus Nguu.

CHERRY TIGGO

Though this might seem to be a tall order, in a market largely dominated by Japanese vehicle manufacturer Toyota, according to industry statistics, Chinese firms setting up base in the country say the journey of a thousand miles begins with one step.

Just this year, didn’t China overtake Japan as the second largest economy, after the US?, they argue.

“Pricing is our competitive edge, driven largely by lower costs of production in China and bolstered by improved technology,” says Mr Nguu.

Stantech is the local dealer for Chery International and ZX auto vehicles, having signed a deal agreement in 2009. The former sells it saloon cars, such as Chery Tiggo, QQ3 and A3 models, and ZX pick-ups such as Grand Tiger and Admiral.

Take a ride

The pick-ups, he says, are ideal for small and medium enterprises. Having sold about 150 units by September 2011 in both categories, Mr Nguu is optimistic of success, saying Kenyans will appreciate the Chinese brands once they take a ride in them.

Stantech is not the only company attempting to upstage Toyota. Two other Chinese automakers are establishing assembling plants in Kenya.

“A Sh2 billion ($20 million) assembling plant to be set up by February 2012, in Mombasa, will reduce the price of our products by about 15 per cent,” said TransAfrica Motors managing director Ali Zubedi.

The firm has sold about 500 trucks in the region since the start of the year.

Mr Zubedi said they had received approval from the Kenyan government — as contained in the Kenya Gazette — and are already recognised as assemblers.

The plant is projected to produce about 500 units a month to serve East and Central Africa markets.In May this year, Foton East Africa launched a Sh4.2 billion assembling plant on Mombasa Road, aimed at increasing its hold of the region.

Foton is the second largest commercial vehicle manufacturer in the world. It will produce a wide range of models such as tippers, 14-seaters, light duty trucks, and heavy-duty trucks.

The company is also building on after-sale service to increase customer confidence.“In case a Foton vehicle breaks down in Kisumu, our qualified dealer in Kakamega will attend to it quickly,” he said.

Ongoing efforts to improve the infrastructure in Kenya will help the new entrants, bolstered by the government’s shift to do business with the East, with China leading the pack.

Dealers Stantech are also in “discussions on establishing an assembling plant in Kenya,” said Mr Nguu.

Once assembly plants are establishing locally, the vehicles will enjoy tax incentives. Duties on locally assembled units are at zero per cent, against 25 per cent for fully-built units.

The strategy will take the competition to the doors of the Thika-based Kenya Vehicle Manufacturers, the Association of Vehicle Assemblers in Mombasa, General Motors East Africa, and add a supply matrix that is expected to lower prices.

“We want to tap into the construction boom. Chinese contractors and businesses are some of our clients,” said Mr Nguu.

Foton managing director Calvin Guo said Kenya is a commercial, financial and communication hub in the region, hence ideal to set up the plant.

He added: “The Kenyan economy is improving. We want to produce vehicles targeting the commercial segment to aid this growth.”

Mr Guo said they have sold more than 300 units since the start of the year and project to surpass a 400 units target before the end of the year. He further noted that their tipper has a double-charged engine that enhances efficient fuel consumption.

Mr Zubedi said the regional market is promising, with a rise in demand each month.

Faw is also set to introduce the J6 model, which is an electronic transmission model for a diversified portfolio of customers. Among the firm’s main competitors in the market are Hyundai, Daimler, Volvo, Ford and Isuzu.

Besides gaining from technology transfer, the investments would create employment and improve the local economy.

“Once we establish a strong local footprint, coming on too as a garage, many Kenyans will be assured of their jobs through our growth. The returns realised will be invested to improve the economy,” said Mr Nguu.