China’s Foton Expands Into East Africa

Chinese auto maker Foton opens a $50 million assembly plant in Nairobi as it seeks to expand into Kenya and East Africa.

Kenyan Prime Minister Raila Odinga launched the facility at a ceremony attended by a Chinese delegation led by Liu Qi, a member of the Political Bureau of the Communist Party of China Central Committee.

Odinga urged auto makers to produce low-cost cars to allow more Kenyans to afford new vehicles.

Prohibitive prices are responsible for consumers preferring secondhand vehicles that now command up to a 70% market share in East Africa, he says in a statement.

“We must do all in our power to ensure ours is not a country where a shrinking number of people do really well, buying the best and latest vehicles in the market, while a growing number of Kenyans can barely put food on their table.”

China’s government-owned Xinhua news agency says the new plant’s capacity is at least 10,000 units a year. This allows Foton to avoid a 25% duty on completely built-up imported units while meeting a rapidly growing demand for pickups and light-commercial vehicles.

Foton is recruiting dealers across East Africa, a region now dominated by a handful of auto makers including Toyota and General Motors.

Odinga says the emerging competition in the vehicle-assembly industry is a sign of good times ahead with the coming of the East Africa Common Market covering Kenya, Uganda, Tanzania, Burundi and Rwanda.

“In the past, the fragmented economies of the East African countries discouraged the auto (makers) from setting up assembly plants,” he says. “The common market has made it possible to plan for this market of more than 130 million people.”

Odinga says India’s Tata plans an assembly plant in Mombasa, Kenya’s second-largest city, and adds Hyundai also is interested in entering the market.

 “It is a new era of competition,” he says. “And competition is always good news for the consumer.”