Industry Trend Analysis - East Africa\'s Automotive Investment

Posted on :Monday , 26th October 2015

Having unveiled its newly developed hybrid electric sedan, the Kiira EV SMACK, Kiira Motors Corporation (KMC) is currently seeking to raise USD350mn worth of investment to establish a new vehicle assembly plant in Jinja Industrial and Business Park in Uganda. If the necessary investment funds can be secured, the automaker has stated that production will begin in mid-2018 with a planned capacity at the plant of 300 units per month (3,600 units per year), later rising to 830 units per month (9,960 units per year).

However, while the vehicle's development and production by local engineers and suppliers represents a milestone for Uganda's nascent heavy manufacturing industry, we stress that the project faces a number of significant risks to its commercial success. From an operational perspective, the limited availability and reliability of electricity, and limited availability of skilled labour will keep manufacturing costs substantially high for KMC compared to producers elsewhere in the East Africa region. Furthermore, the Ugandan new vehicle market remains far too small to absorb the company's planned output, raising the costs for the producer to engage in costly marketing and export operations elsewhere in the East Africa Community (EAC) region. As a result, we believe that Kenya will still remain the EAC region's main production hub for new vehicles

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