The Star (Nairobi)

31 January 2013

East Africa: GM Doubles Assembly Capacity to Fight Competition

Increased competition in local assembly of commercial vehicles has pushed General Motors to expand and upgrade its Nairobi plant. It will now be assembling up to 10 trucks and buses a day up from five after the Sh100 million upgrade.

Several vehicle manufacturers particularly from China and India, plan to set up assembly plants locally threatening GMEA market dominance.

Chinese giant, Foton is due to open a Sh1.2 billion assembly plant in Mlolongo. Other new entrants include Chery,Cica, Hyundai, Hino, Eicher and Mahindra.

Toyota this month also announced it will also start assembling buses locally. Toyota is GM's biggest rival in the local new commercial vehicles market.

General Motors has been dominant in heavy commercial vehicle assembly in the region with competition from Associated Vehicle Assemblers and Kenya Vehicle Manufacturers. The three produce nearly 6,000 vehicles a year.

"Growth in the region has spurred competition, our key priority is to continue growing our business in the bus segment," said Rita Kavashe, GM managing director.

"Competition also means we have to check on out costs and see ways to reduce expenses," she said. The high demand for buses has been spurred by the gradual phase off of 14 seater matatu in favor of higher capacity buses.

"Other East Africa countries are also looking at what Kenya is doing in the public transport sector, we will be launching our PSV vision2030 project in the region," Kavashe said.

The commercial trucks are also in high demand as trade and construction activities increase in the region. GM sold 3421 vehicles in the region last year which is 26 per cent of the new vehicle market share.

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