Volvo Group, the manufacturer of Volvo Trucks, is investing Ksh2.5 billion in assembly plant in Mombasa, Kenya, to serve the growing East African market.
Volvo Trucks President Claes Nilsson says the plant, the third assembly in Africa after South Africa and Morroco, will be launched in the first quarter of 2018, with an initial output of 500 units per year.
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Mr Nilsson says Volvo will make modern trucks tailor-made for the region. “We see great opportunities and believe that this part of Africa that has potential to grow substantially; it has a lot of different resources due to the diverse production of different products and natural resources,” Nilsson told Capital FM Business.
“Business conditions here is that you have to have a manufacturing plant, unless you do that, you are not a serious player in this market.”
Volvo is the second foreign car assembler in Kenya following Volkswagen which last year resumed production of cars in Thika after a four-decade pause. French car manufacturer Peugeot has promised to return to Kenya to assemble five of its models beginning June this year.
The plant will be set up through a partnership with NECST Motors, who are the exclusive importers of Volvo trucks in the Eastern African region. The planned investment is expected to create approximately 300 direct jobs in addition to other indirect employment opportunities.
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The firm is eyeing 20% market share in the next three to five years. “We have been in East Africa for the last three decades and believe that there is a significant potential for the premium truck business as regional economies grow, infrastructure investments expand and the business environment remains investment friendly,” Nilsson said.
Volvo Trucks regional office has been opened in Nairobi which will be responsible for expanding the footprint of the brand in East Africa. “The willingness and desire by the government to invest in infrastructure is necessary to use our products that are premium and heavy duty used for transportation,” he noted.
The firm has over 20% market share in Morroco and 18% market share in South Africa. Overall the firm has about 15 plants worldwide. In 2016, the firm sold 103,000 trucks in 128 different countries with the turnover hitting Ksh3.6 trillion.
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