New lifeline for local vehicle assemblers

Local motor vehicle assemblers have been granted a multi-billion shilling lifeline as the government mulls a new policy that will see it procure only locally-assembled vehicles.

Treasury Secretary Henry Rotich Thursday stated that the new Government Transport Policy will exclusively promote car and motorcycle dealers that have local assembly plants.

“The Cabinet is considering a new Government transport policy that will standardise the institutional framework for fleet management and use of fuel cards across Government in order to improve efficiency and cut cost,” said Mr Rotich.

“In addition, the policy will promote local industries by requiring that all Government vehicles be procured only from local assembling plants.”

The move by the government, which accounts for a quarter of all new vehicle sales, will set them up for an opportunity to grow their market share significantly as well as a significant portion of the new car market revenues.

In the last financial year, Treasury allocated Sh9.4 billion to cater for the lease of vehicles attached to the police, the State Law Office and the Director of Public Prosecutions, among other State departments. The government had spent Sh7.2 billion to lease vehicles in 2017.

“In order to take full advantage of the preferences and reservations in the procurement Act and promote local industries through the ‘Buy Kenya Build Kenya’ initiative, we are in the process of developing a catalogue of items that are locally manufactured, assembled, mined or grown in Kenya and which will be given priority in public procurement,” said Mr Rotich

Under vehicle leasing, the State pays a fee to the respective dealers who undertake to provide a certain number of insured and serviced vehicles over several years.

In the current plan, car dealers have committed to service the government vehicles for a period of four years or until they clock 160,000 kilometres, whichever comes first.

The government, in return, pays a monthly, quarterly or annual fee and returns the vehicles to the dealer once the contract expires.

This is not the first time local assemblers have been favoured by the government. In 2016, President Uhuru Kenyatta directed ministries and government departments to buy locally assembled cars as part of a plan to expand the new vehicles market and attract more global automakers to invest in Kenya.