CMC urges review of tax to boost uptake of locally assembled vehicles

July 25, 2016
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James Kass, the Group CEO of CMC Holdings Limited East Africa said CMC is pumping more money in KVM plant in Thika
James Kass, the Group CEO of CMC Holdings Limited East Africa said CMC is pumping more money in KVM plant in Thika

, Nairobi, Kenya. 25th July 2016 – The CMC motor group has urged the Government of Kenya to whet the appetite of the locally assembled car manufacturers also known as Completely Knocked Down Unit (CKD) by reviewing the tax regime.

Speaking at a breakfast meeting CMC Holding CEO James Kass, urged the Government to offer favorable tax breaks to promote the local assembly as a means of spurring innovation, youth employment, and skills transfer.

“With 20 percent tax excise duty breaks on large trucks and buses imposed by the Government, I don’t think it will be possible for people who bring in fully assembled vehicles especially the large trucks and buses to survive. What this move will do is to bring prosperity, employment, trust, and encourage Kenyans to buy Kenyan,” said Kass.

The group, in what they term as ‘investing according to scale and opportunity’, wants to up their investment in the 3-acre assembly plant situated in Thika at the Kenya Vehicle Manufacturers (KVM) plant.  The group has plans that will see 75 percent of all their sales of heavy commercial vehicles in the next 3 years assembled locally.

“With the population of Kenya standing at 45M, majority of them under 35 years, the Government must look at ways to create local employment by encouraging local assembly plants. We want KVM to be the powerhouse assembly plant in sub-Saharan Africa,” added Kross.

He, however, decried the revised tax regime for second-hand cars by the Treasury during the June 8th budget reading. The CS for finance revised the earlier tax regime which would have reduced the number of second-hands imported vehicles and encouraged the local assembly market.

However, the cost of purchasing new cars by the middle class has proven to be inhibitive. Kross emphasized the need for partnership between buyers, insurance companies and bankers so that the pain of purchasing a new car is knocked down.

“When I got my driving license, I was excited that I was going to be able to drive my new car. Everybody wants to drive a new car.  But it’s just too expensive here. We can bring the importation rule to maybe 3 years. No one will want to buy the second-hand vehicles,” emphasized Mr. Kass.

He called on the government through KRA, ministry of trade, industrialization and other business leaders, to lobby together and find ways of how they can fuel the local assembly opportunity.

“We need to bring the 12 to 15 business leaders on a round table so that we can see how to make Kenya the Nigeria of the West in terms of local assembly,” closed Mr. Kass.

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