Caetano Kenya, recently appointed as the distributor for Ford Motor Company in Kenya, is strategically planning to navigate escalating import taxes by considering local vehicle assembly before 2024. The automotive industry promptly responded to this decision following a surge in automobile import taxes, necessitating an exploration of alternative solutions.

Pedro Campos, the Managing Director of Caetano Kenya, emphasized the challenges that car dealers face due to capricious tax modifications. These changes detrimentally impact sourcing, logistics, and pricing. The exorbitant taxes in Kenya have prompted Caetano to consider local assembly as a strategy for alleviating these difficulties.

Campos elucidated: “We do not favor any abrupt tax changes, as they generate sourcing difficulties, disrupt logistics, and escalate prices. Indeed, the taxes within Kenya remain high; however, we can explore alternatives like local assembly. It is a path we actively tread to curtail these taxes.”

Acknowledging the challenges taxes present, Campos disclosed an anticipated completion of the first locally assembled model by March next year; however, he emphasized it wouldn’t be for Ford vehicles.

Campos added, “Given the market’s positive reception of their new models, we are also discussing with Ford about local assembly. However, the recent arrival of Ford’s first batch of vehicles two months ago hampers a fully representative depiction in our current sales figures.”

New taxes have significantly impacted the automotive industry in Kenya, grappling with a decline in new vehicle sales. Industry data reveals that over an eight-month period until August, consumers burdened by taxes amid economic uncertainties faced and underscored this challenge through a 13 percent decrease in their purchases, thus painting an alarming picture of market conditions.

Following a recent partnership between Ford and Caetano, an alliance with the goal of boosting Ford’s market share by capitalizing on Caetano’s established network in Kenya, Campos now makes this announcement. Commencing its sales, Caetano introduced new-generation models such as Ranger, Raptor, Everest, and the Ford Transit Bus, significantly enhancing their offerings.

Primarily due to the disruptions caused by Covid-induced shocks, the automotive sector globally experienced production slowdowns. Semiconductor shortages, critical components in modern vehicles, were significant contributors to this global deceleration in car production.

Caetano Kenya’s exploration of local assembly may precipitate a transformative shift in the Kenyan automotive landscape. This could potentially provide a more sustainable solution to challenges imposed by high import taxes on vehicles, benefiting not only the automotive industry but also bolstering economic resilience for the country.