French automaker Peugeot S.A. has started local assembly of its brands at Thika-based Kenya Vehicle Manufacturers (KVM), becoming the latest multinational to produce vehicles at the plant.
Peugeot, which has partnered with its local franchise holder Urysia in the assembly of the 508 and 3008 passenger car models, had announced the plan earlier but did not say which of the local assemblers it would use.
Urysia's managing director Claude Mwende did not respond to our request for comment on this story by the time of going to press.
"KVM started assembling Peugeot cars last week," said a source familiar with the multinational's activities in Kenya.
The 508 is a sedan while the 3008 is a small SUV that was named Car of the Year 2017 in March in Geneva by a judging panel comprising 58 European journalists. Both models are expected to be priced above Sh4 million.
KVM and Mombasa-based Associated Vehicle Assemblers (AVA) are the only facilities that offer contract production, with Isuzu East Africa running a facility exclusively for its brand of commercial vehicles.
President Uhuru Kenyatta was scheduled to launch Peugeot's assembly at KVM but his diary has been busy with campaigns for the repeat presidential election, our source said.
Mr Kenyatta last year launched the assembly of the Volkswagen Polo Vivo car at the same facility by DT Dobie -- the local partner of Wolfsburg-based Volkswagen Group.
Urysia has been importing fully-built models including ambulances, utility and passenger cars but this is expected to change with the commencement of local assembly.
Peugeot's move to start local assembly signals the multinational's increased confidence, with demand for its range of vehicles rising in the local and regional market.
Increased interest by global automakers in Kenyan assembly is set to benefit the economy through creation of new jobs, transfer of skills and technology besides lowering the price of new vehicles.
Completely knocked down (CKD) vehicles headed for assembly plants are exempt from import duty (at 25 per cent) and excise tax (20 per cent of a vehicle's value) that are levied on fully-built imports.