NAIROBI, Kenya, Feb 4 – Motor vehicle manufacturer General Motors has said it expects to double its exports business this year following the decision by Tanzania to grant market access to duty free vehicles from Kenya.
General Motors East Africa (GMEA) Managing Director Bill Lay told reporters on Wednesday that following the decision by the East Africa Community to review the region’s rule of origin and reinstate vehicles assembled in East Africa at favourable rates, the company would now be able to export vehicles to the whole region.
“Last week, Tanzania allowed our matatus to access their country duty free. So we are hoping that our profits can grow and we are looking at that as a bright spot in our export strategy,” he enthused.
Last year, the company had two of its vehicles grounded at Namanga border since December 2008, after the Tanzania customs officials charged them 25 percent import duty.
Generally, vehicles that are 35 percent locally assembled should access the East African market without paying duty. This is because the EAC Customs Union protocol which came into force in January 2005, removed internal tariffs on many goods within the EAC.
GMEA adds about 40 percent of value to vehicles such as pick ups which have about 60 percent of the spare parts imported from Japan and thus their vehicles qualify to be shipped through the region without paying duty.
Mr Lay also expressed confidence that their business would not be negatively affected by the on going global recession as it had their parent company in America, as local banks were still advancing credit to customers.
“Our credit market has not dried up because our banks are locally funded so their customers in East Africa are still able to access credit that they need to buy our products,” Mr Lay explained.
He maintained that there was no direct link between the East African and the US markets. The automaker has lost more that $20 billion in the first half of last year and is said to be considering a merger with Chrysler in a bid to salvage its future.
Mr Lay however acknowledged that despite the increase in the demand for commercial vehicles, 2009 presents a challenging year for the company due to the increased importation of second hand vehicles, increased cost of doing business and the on going global recession.