Volvo Group is set to invest up to $24M (Ksh2.5 billion) into an assembly plant in Mombasa, eyeing the East African market whose growth surpasses the sub-Saharan Africa average.
The Swedish maker of vehicles and construction equipment is seeking to advance market share in Kenya, Uganda, and Tanzania from 2 percent to above 10 percent. The Mombasa plant will be the third after Morocco and South Africa.
According to Volvo Trucks President Claes Nilsson, the plant will be launched in the first quarter of 2018. Nilsson said this in an interview in Nairobi. The firm targets to produce 500 trucks per year.
“We see great opportunities and believe that this part of Africa 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 adding that the firm will create market top modern trucks with regional specifications in mind.
The planned investment which is in partnership with Kenyan car dealer NECST Motors will set-up to 20 new workshops across the region.
The plant in Mombasa is expected to create about 300 direct jobs and indirect job opportunities to several other people.
East Africa’s largest economy is expected to grow by 5.3 percent this year, which 2.7 percent more than sub-Saharan’s average of 2.6 percent, according to the International Monetary Fund. On the other hand, Uganda and Tanzania are predicted to expand by 5 percent and 6.8 percent respectively. With such positive data, Volvo believes the regional growth will contribute to its expansion plans.
“We 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 has opened a regional office in Nairobi, which will be responsible for expanding the brand’s footprint in East Africa.
Globally, Volvo trucks are assembled in 15 countries. The firm sold 103,000 trucks in 128 countries with a turnover of $34.8M (KSh3.6 trillion).
Other manufacturers who have shown interest in the local market include German carmaker Volkswagen, French car manufacturer Peugeot and Iveco-an Italian industrial vehicle manufacturing company. Toyota is also set to expand its assembling plant in Kenya.