The 15th Auto Expo Kenya International Trade Exhibition to be held in May 2012 is all set to present over Automotives and spare parts from over 11 countries. The event this year is showcasing a wide range odf products from China as over 30 companies are participating from the country that is ine of the largest producers in the world.The number of exhibitors and visitors in 2012 is expected to rise by at least 20% since an aggressive campaign has been launched while celebrating the event's 15th birthday. Trade visitors from all over East & Central African countries are being invited directly and in collaboration with several regional trade bodies in Kenya, Tanzania, Ethiopia, Uganda, Somalia, Mozambique & Congo.

Though Kenya by itself is one of the biggest markets in Africa, major emphasis is being laid upon attracting traders and importers from neighboring countries. The experience and comments of exhibitors at previous events indicate substantial gains from unexpected foreign visitors and we strongly feel that a rise in such statistics would ensure business specially for the foreign participants who form almost 80 - 85% of the exhibition.

The Automotive industry in Kenya is primarily involved in the retail and distribution of motor vehicles. There are a number of motor vehicle dealers operating in the country, with the most established being Toyota (East Africa), Cooper Motor Corporation, General Motors, Simba Colt and DT Dobie. There are also three vehicle assembly plants in the country, which concentrate on the assembly of pick-ups and heavy commercial vehicles.

The established dealers face intense competition from imported second-hand vehicles, mainly from Japan and United Arab Emirates. These imports now account for about 70% of the market. The last decade witnessed a significant decline in the number of new vehicles sold in the country. There has been a steady recovery in the last four years, but the numbers achieved still fall far short of the numbers recorded a decade ago. In 2004, the leading motor vehicle companies recorded sales of 9,979 units. Although 27% better than the previous year, this is still well below the levels achieved in the early 1990's.

The Kenya Motor Industry Association (KMI), the representative body of the corporate participants in the motor industry, has been lobbying hard to reverse this trend. Some of these measures have helped the industry recover from its lowest point in 2000, when only 5,869 units were sold. On their part, the companies themselves have become more innovative in responding to customer needs. Some of the measures that KMI has been advocating include:

• Implementation of strict criteria on importation of second hand vehicles
• Incentives to promote local assembling of commercial vehicles
• Export incentives aimed at encouraging car manufacturers to expand operations in the region.
• PricewaterhouseCoopers provides services to major companies in the Automotive sector in Kenya and the East Africa region.

Mahindra Scorpio in Kenya

Mahindra & Mahindra has launched the new Scorpio in Kenya as part of a series of international launches. The company has appointed a Kenyan company - Oriel Ltd to distribute the vehicle in the country. The new Scorpio SUV is being launched in Kenya with 40 changes and improvements.

Oriel, part of the long established Ecta Group in Kenya, will start by launching M&M's Scorpio, a 2.6-litre turbo diesel SUV. This flagship model will be swiftly followed by M&M's Bolero, a one-tonne pick-up.

The company has a strong presence in the US, China, Malaysia, West Asia, Australia, Latin America and West Asia, as well as increasingly in Africa. Over the next couple of years it plans to get about 20 per cent of its volumes from global ventures. Mahindra is looking to consolidate operations in East Africa.

Mahindra's subsidiary in South Africa has sold over 3,000 vehicles and sales is expected to cross 5,000 vehicles this year.

High Demand for Motercycles in Kenya

Saving money and themselves from traffic jams is increasingly becoming importat for Kenyans. Escalating fuel costs, high parking fees, traffic jams and affordable motorcycles are luring Kenyans away from personal cars. This is a situation which has been building up during the last three years with the climax recorded in 2008. The scenario is a major departure from the past when motor bikes were mainly used by government employees in remote areas where cars could not endure, and by courier companies to make deliveries.

Kenyans have slowly moved from shunning motorbikes to choosing them as the most cost-effective way of saving money and time while moving around the city and countryside. Figures recently released by Kenya National Bureau of Statistics indicate a growth of 225% in sales of motorcycles in 2008. In 2003, the total sales of motorcycles stood at 2,084 units while in 2008, the number stood at 45,935, an increase of 2,000%. In many rural areas and some urban centres, motorcycles have become a reliable means of transport, ferrying people from one place to another, just like taxi.

With the motorcycle explosion in Nairobi, several business opportunities have emerged. Banks and micro-finance institutions are also targeting transporters especially those using motorcycles to offer them loans. Most of the motorcycle operators within Nairobi and other major urban areas took loans to buy their first motorcycles.

Prices of good/trendy motorbikes range from Ksh 570,000 (US$ 7,200.00) to Ksh 2.2 million (US$ 27,800.00). These are mainly purchased by middle level executives and young people from well to do families. Under this category, the main focus has been Sportbikes (600cc - 1400cc), Enduros (250cc - 650cc), Streetbikes (400cc - 1000cc), and others like Cruisers (400cc - 1800cc). The scrapping of value added tax (VAT) on importation of motorcycles of up to 250cc in July 2007 brought the prices down and resulted in higher demand for motorcycles in Kenya. The most popular high end models in the market are Japanese makes including the popular Honda, Suzuki and Yamaha.

The single largest source of motorcycle imports in Kenya is China, which mainly supplies low end makes which are very popular with low income earners due to low prices. China made motorcycles are also popular with transport operators who ferry passengers in both rural and urban areas. Prices of China made motorcycles range from Ksh 45,000.00 (US$ 570.00) to Ksh 90,000 (US$ 1,140.00). India is also becoming an important source of low end motorcycles.

Demand for motorcycles is projected to record high growth in the coming years, especially driven by the increased demand for cheaper transportation costs. Motorcycles are becoming the preferred mode of transport due to flexibility at evading traffic jams and low fuel consumption. Passenger ferrying motorcycles are becoming popular as they are faster and even cheaper compared to public service vehicles.

Malaysian manufacturers of motorcycles should also be encouraged to venture into the Kenyan market. The target group for Malaysian made motorcycles should initially be the middle income group which will use the motorcycle to commute to and from workplace. The low income consumers prefer the Chinese made motorbike due to low price while the upper income consumers will go for the high end Japanese models.

Malaysian companies should be encouraged to appoint agents in order to market their motorcycles more effectively. Alternatively, guided by proper planning, these companies could consider the possibility of establishing an assembly plant in Nairobi, which will also cater for other markets within the region.

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