KENYA – Indian automaker Mahindra & Mahindra has started assembling two of its small commercial trucks in Kenya, becoming the latest global carmaker to start operations in East Africa’s richest economy.

Mahindra’s entry follows that of French carmaker Peugeot SA and Germany’s Volkswagen A, both of which announced resumption of local assembly in 2017 and 2016 respectively, after decades-long absences.

The interest in the local new vehicle market by international firms, which also include Swedish truck maker Volvo AB, comes in the wake of government efforts to attract investment in the sector to create jobs, by offering a range of incentives such as tax breaks.

Nairobi is also planning to limit the age of second-hand vehicles that can be imported into the market as part of the drive to encourage investment in local assembly of new vehicles.

Used car imports from countries such as Japan make up 85per cent of annual car sales in Kenya, while the rest are locally assembled or brand-new imports that have already been assembled.

Mahindra has started to assemble its Scorpio Single and double cabin small trucks at a plant in the coastal city of Mombasa. The plant is owned by its local partner, car retailer Simba Corporation, Mahindra said in a statement.

Mahindra plans to use Kenya as a gateway into the wider African market as it looks to grow its share of the commercial and passenger vehicle categories, it said.

Kenya’s President Uhuru Kenyatta has asked government officials and local lenders to discuss how they can offer affordable auto loans to consumers in order to further boost demand for new vehicles, his office said in a statement.

He directed the National Treasury and the Kenya Revenue Authority (KRA) to find ways of lowering taxes of vehicles fully assembled in the country.

“I shall continue to provide incentives to expand this sector,” Kenyatta said.

Speaking during the unveiling of the Mahindra vehicles at State House, Nairobi, the President stated that the move is aimed at making the vehicles more affordable.

The Mahindra Scorpio Single and Double cabin pick-ups were assembled at the Associated Vehicle Assembly (AVA Kenya) plant in Mombasa.

AVA is a wholly owned subsidiary of Simba Corporation Limited.

“To make locally assembled vehicles more affordable and available to Kenyans, I have also directed that the National Treasury and the Ministry of Trade, Industry and Cooperatives hold discussions with financial institutions to create special products for locally assembled vehicles,” President Kenyatta said.

President Kenyatta further called on motor vehicle assemblers, in consultation with the National Treasury and the Ministry of Industry, to work out a mutually agreeable framework that will ensure the benefits accruing from the tax incentives are passed on to the consumer.