MASSIVE!! EAC Motor-Vehicle Assembly Industry Gets Mega Boost

The East African Community (EAC) motor industry prosperity once a dream has started becoming a reality.

Museveni handshakes Musasizi during the launch of KMC solar bus
Museveni handshakes Musasizi during the launch of KMC solar bus

The most recent good news to the baby industry is that as you read this, all the EAC heads of state have directed the council ministers to study and swiftly find out modalities of promoting the industry.

In line with what the heads of EAC states agreed on during the above summit, the ministry for EAC affairs has directed Uganda Investment Authority (UIA) and all the other responsible bodies to do whatever it takes to set the industry plans rolling.

“The 16th ordinary summit of the East African (EAC) heads of state directed the council of ministers to stud the modalities for promoting the motor vehicle assembly in the region to reduce the importation of used vehicles from outside the community,” reads in part, the letter signed by the EAC permanent secretary-Daniel Mugulusi, to UIA that was received on January 27, 2016.

It adds, “in accordance with this directive, the ministry of EAC Affairs is undertaking field research targeting the public sector agencies, the private sector, the civil society and academia to establish Uganda’s perspective on the matter.”

In Uganda, the immediate beneficiary of this initiative is certainly the Kiira Motors Corporation (KMC) that has already confirmed that setting up our own motor vehicle assembly plants is the way to go.

According to KMC chief executive officer-Paul Isaac Musasizi, this industry will unbelievably grow EAC’s economies by great margins in a few years.

Explaining to Red Pepper, some of KMC findings that have for long hindered EAC motor vehicle assembly industry growth, Musasizi said,

“The embryonic Automotive Industry (vehicles and motor cycles) in Uganda has for a while been characterized with importation of brands from world renowned automotive original equipment manufacturers like Toyota, Nissan, Ford, GM, and Bajaj with over 90% of the stock imported as gray market vehicles.”

KMC's Musasizi discussing the Automative value chain during the seminar
KMC’s Musasizi discussing the Automative value chain during the seminar

Musasizi revealed that in the 1960’s the industry was dominated by brand new vehicle sales due to limited individual use and ownership of vehicles since they were predominantly owned by government officials.

The 1980’s fuel crisis caused demand for economy cars that had low fuel consumption and affordable.

The increased demand for the cars created the gray vehicle market as high-end customers were introduced to different model year concept that saw increased disposal of brand new cars to lower income earners in the automotive ecosystem.

KMC’s research further found out that ‘the gray’ vehicle market in Uganda thrived because of their low purchase price, availability of gray spare parts; skilled servicing and repair workmanship was easily accessible.

The motor cycle(2/3 Wheelers) segment was predominantly a gray vehicle market in the 1980’s since most of the brands were from Europe though by the early 1990’s their market had begun shifting to brand new 2/3 wheelers from India.

The shift from gray to brand new 2/3 wheeler vehicles is part of government’s intervention to wean the economy of gray vehicles as it builds local capacity to manufacture vehicles.

“The automotive industry in Uganda in the last decade has taken tremendous strides with very fundamental shifts in technological innovations, a change in brand perception, a shift from gray to newer models of cars especially for Government Fleets and some of the Leading Organizations, and affirmative government policies instituted to discourage the importation of gray stock. These are part of the reforms needed to create a foundation for automotive manufacturing in Uganda,” recommended Musasizi.

He added that there is need for a well-crafted and inclusive Government Automotive Industry Development Policy to address three aspects of the fertile Automotive Manufacturing Industry in Uganda.

This will ensure quality standards in terms of safety and enhanced environmental stewardships, milestones against which automotive value chain actors attract government incentives and regulation of vehicle exports and imports.

KMC, the presidential initiative for Automotive Manufacturing in Uganda is supported by the Government of the Republic of Uganda.

The market entry product mix for KMC includes pickups, SUVs, sedans, light and medium duty trucks, and buses.

Kiira Motors’ commitment to championing  the progressive development of this nascent industry makes it’s a reliable source of information and knowledge to provide an understanding of what needs to be done to create a regional, vibrant and sustainable automotive industry.

In the same vein, KMC hosted a number of stake holders at their Ntinda based offices in a consultative seminar on micro analysis of the commercial vehicle (trucks and buses) market in Uganda.

Among the issues discussed were CV application for hubs, CV application classification, asset financing in automotive value chain, product support, site and logistics proposals and investment incentives.

Stakeholders like UIA, URA, MTIC, URSB, UNRA, UMEME, NWSC, NITA-U, UNBS, NEMA, UFTZA among other attended and pledged to offer full support to the industry.