The number of locally assembled vehicles dropped by 14.58 percent in 2024—the biggest dip in seven years, reflecting reduced demand amid elevated borrowing costs.
Data from the Kenya National Bureau of Statistics showed that local assemblers rolled out 11,555 units in 2024—the lowest number since 2021.
The slide is the first in the post-pandemic (after 2020) era, and the steepest fall since 2017, when volumes churned out contracted 22.41 percent to 4,884 vehicles — the lowest levels in at least a decade.
Reduced output by assemblers such as Isuzu East Africa, Kenya Vehicle Manufacturers and Associated Vehicle Assemblers is reflected a drop in sales of new vehicles in the year after financing costs crossed the 20 percent mark in 2024.
Kenya Motor Industry Association (KMI) data showed earlier this year that domestic sales of new vehicles declined 2.74 percent to 11,059 units in 2024, the third year running that purchases dropped to hit the lowest level since 2010.
Locally assembled vehicles, which are shipped in as completely knocked down (CKD) units, make up the bulk of new vehicle purchases, accounting for more than 80 percent of sales.
The share of domestically assembled vehicles has grown from less than half of sales in 2017 to the current levels, driven by a number of incentives aimed at boosting job opportunities for the growing number of skilled and semi-skilled unemployed youth.
For example, CKD parts for assembly are imported at a preferential tax rate of 10 percent, while a fully built unit (FBU) is taxed at 35 percent.
Importers of FBUs also pay excise duty of between 25 percent to 35 percent, depending on the size of the engine, in addition to the standard 16 percent value-added tax (VAT).
Excise duty is levied on the sum of the landed cost of the vehicle and import tax, while VAT is charged on the resulting value [the sum of landed cost, import tax, and excise duty].
This has made it cheaper for automotive firms to import CKD parts for assembly in their local plants. The firms also pay half the 30 percent corporate tax rate for the first five years of operations.
Isuzu East Africa, with a market share of 46.62 percent in 2024, assembles its pick-ups, buses, and trucks at its Nairobi plant.
CFAO Motors Kenya, with a 34.26 percent market share, assembles its various models under brands such as Toyota and Suzuki at KVM, which it partly owns together with the government and other partners.
AVA, on the other hand, is owned by Simba Corp, which assembles vehicles under brands such as Mitsubishi, Proton, Ashok Leyland and Mahindra. Simba Corp accounted for 8.83 percent of the new vehicle market in 2024.
The Ruto administration is seen gravitating further toward incentive packages for the local automotive assembly industry towards electric motors.
“Transitioning to electric mobility (e-mobility) remains a priority intervention of the Government’s inclusive green growth and climate action plan aimed at reducing greenhouse gas emissions and air pollution while at the same time meeting the mobility needs of consumers,” the Treasury wrote in the 2025 Budget Policy Statement in February.
“Electric vehicles and motorcycles are an important breakthrough toward bettering air quality and easing traffic in busy cities because of their quiet operation and lower running costs as compared to fuel diesel buses.”
