Apr 11, 2011
General
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About two years ago companies dealing in new motor vehicles and local assemblers were struggling to stay afloat as imports of used vehicles flooded the market. This is, however, changing courtesy of the reforms that the government is undertaking in the public service transport. Motor vehicle companies like GM East Africa, CMC, DT Dobie, Scania, Tata and Mistubishi that deal in public service vehicles are among beneficiaries of this policy shift.

About two years ago companies dealing in new motor vehicles and local assemblers were struggling to stay afloat as imports of used vehicles flooded the market.

This is, however, changing courtesy of the reforms that the government is undertaking in the public service transport. Motor vehicle companies like GM East Africa, CMC, DT Dobie, Scania, Tata and Mistubishi that deal in public service vehicles are among beneficiaries of this policy shift.

Local assemblers like Kenya Vehicle Manufacturers Association of Vehicle Assemblers, GM are busy again with new demand driven by new reforms. There are also new entrants like Foton East Africa that could take-off riding on this new demand for PSV.

The new lease of life is coming at the expense of the 14-seater matatus that the government is phasing out in favour of higher capacity vehicles to decongest Kenya’s cities.

According to experts, transport is expected to grow tremendously in the coming years as savings and credit co-operatives upgrade their fleet to higher capacity vehicles.

GM East Africa last week said it would ride on these reforms in public transport to grow its vehicle sales in Kenya, adding that their production line is in overdrive to meet demand.

About 5,000 buses are required in the next two years, which the local assemblers say is within their capacity to produce, with most of their yards operating at only 30 per cent.

Some are, however, raising issues over the possible compromise on standards, particularly body-building in terms of safety, with trends noted that some of them easily collapse when involved in accidents.

Nevertheless, the market is gearing up for high uptake of buses, with assemblers like KVM saying they have increased production and await the impact of the policy change to go full steam.

The company has been educating Sacco officials on safety features of its bus bodies, and managing director, Mr David Percival said they were waiting for groups to hold their annual general meetings from mid this year for sales to start rolling out at much faster rate.

He said the government’s penchant at shifting its stand on changes in the sector could also be holding back investors.

Some players, however, say there is noted shortage of buses in some categories, particularly those above 51 seats.

Kenya Bus Management Services managing director, Mr Edwins Mukabana said although there was capacity for production of the buses, the government should also consider opening market for import of completed units.

He said there is need to do route mapping in the cities and counties to ensure expansion of fleet is well spread out to avoid oversupply in some routes.

Benefits of the new policy are expected to flow to vehicle body builders and the artists who paint them. Others in the chain are banks, with several having organised loan schemes for potential investors in the sector.

New General Motors managing director, Ms Rita Kavashe who recently took over from long serving MD Bill Lay said demand for high passenger occupier capacity is currently high and is expected to increase as changes in the transport sector gain steam.

“High occupancy vehicles order book is full and we are struggling to service the orders,” she said.

She, however, said that the recent Japan earthquake had negatively affected the company’s ability to operate at optimal level.

GM East Africa, that has foothold in 40 countries in Africa, has 35 per cent of the market share of vehicles in the sub-Saharan region. The company has strong presence in Nigeria, Angola, Zimbabwe, Mozambique and Senegal.

Ms Kavashe, who is also the export director for the sub-Saharan region said the company would seek to grow its market share in all the countries by 10 per cent and achieve 16 per cent by 2017.

By MWANIKI WAHOME jwahome@ke.nationmedia

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