The Mobius II has entered showrooms at a price of Sh950,000. PHOTO | COURTESY
A Kenyan-made vehicle that is designated as Africa’s cheapest
car has hit the showrooms, bringing to reality the dream of an
entrepreneur who designed it four years ago.
The car,
which trades under the brand name Mobius, entered the showrooms this
month at a price of Sh950,000 – making it the lowest-priced new vehicle
in the country.
Mobius Motors is the maker of the
vehicle while Thika-based Kenya Vehicle Manufacturers (KVM) is the
assembler of the vehicle that is designed for Africa’s rough terrain and
off-road driving.
The vehicle comes with extras such as air conditioning and power steering.
Mobius,
whose design and engineering works are supported by US billionaire
Ronald Lauder, has opened a showroom at Sameer Business Park on
Nairobi’s Mombasa Road.
SPECIALLY DESIGNED
Mr Lauder’s financial backing has helped Mobius scale up its production besides speeding up its journey to the market.
KVM
has assembled 50 units since Mr Lauder injected millions of shillings
into the operation through the Pan African Investment Company (PIC) and
has since sold 10 units.
Mobius Motors is currently looking for distributors in Nyeri, Maua, Meru and Murang’a, and is mainly targeting rural transport.
The
car can seat eight passengers, including the driver, and it has a large
cargo space. Mobius’ promoters are also banking on the vehicle’s
efficient fuel consumption and easy maintenance to establish it as the
car for rural folks.
It has a loading capacity of 625
kilogrammes and a top speed of 160 kilometers per hour, achieved using a
five-speed manual transmission.
At Sh950,000, the car
is significantly cheaper than the lowest-priced showroom models in the
market that cost more than Sh2 million.
Mr Lauder, whose worth is estimated at $3.8 billion (Sh330 billion) by Forbes
magazine, has offered Mobius an undisclosed amount of convertible debt
to help it assemble the first 50 units this year and establish a
distribution network.
A convertible debt is a loan that
can be turned into equity or stock ownership at a future date. Savvy
start-up investors prefer it because it helps them secure investment
funds without setting a valuation on a company — a difficult process for
a pre-revenue company.
Mr Lauder made his money from
cosmetics giant Estée Lauder and served as US ambassador to Austria from
1986 to 1987. Dana Reed, the chief executive officer of PIC, sits in
the board of Mobius Motors.
Mr Joel Jackson, the design
brains behind Mobius, says he expects a vehicle designed specifically
for the African market to appeal to business owners who are looking for
affordable transportation.
RISING INCOMES
The 29-year-old computer engineer told the Business Daily that plans were under way to increase production after the initial 50 units go on sale.
The Mobius is designed to eliminate all non-essential features of a vehicle to reduce weight and cut cost.
KVM
is locally sourcing raw materials used to make the car in the hope of
establishing a value chain that benefits local suppliers.
Last
year, Mobius Motors told Reuters that over 35 per cent of the total
vehicle cost is sourced locally and its target was to get above 40 per
cent.
Mobius is, however, expected to face an uphill
climb in a market that is underpinned by consumer preference for
imported second-hand cars.
There are currently around 800,000 cars on Kenyan roads, with some 90,000 units sold every year.
Official statistics show that 76,122 or 84 per cent of car registrations last year were of used vehicles.
At
Sh950,000, Mobius's retail price is at par with what many Kenyans pay
for used cars, making quality and features such as fuel consumption,
availability of spare parts and after-sales service critical for
consumer buy-in.
The sale of the Mobius comes as
rising incomes and increased confidence in the economy continue to shore
up the rate at which Kenyans are buying cars.
Individuals
and businesses bought 43,360 vehicles in the half year ending June,
representing a 39.3 per cent jump from 35,246 units sold in the same
period last year.
Both used and new-car dealers registered double-digit sales growth, indicating a broad-based growth in demand.
The
majority of vehicle purchases are backed by bank loans and employers’
funds that are mostly hinged on confidence in the borrowers’ ability to
pay.
The purchases, whether in cash or on credit, also
reflect better prospects on the part of those buying the units for
personal use or for commercial activities.
WORK IN PROGRESS
New-vehicle
dealers, however, recorded the fastest sales growth in the review
period, indicating robust demand from their customer base, composed of
the government, blue-chip firms, and wealthy individuals.
Sales
in this segment of the vehicle market rose 39.3 per cent to 8,915
units, driven by government purchases and orders from businesses in the
transport, trade, and construction industries.
Mobius
Motors says it has received a number of pre-orders for the vehicle and
will develop an upgraded car dubbed Mobius III, which is set for
production launch in 2016.
Assembly of the Mobius in
Kenya is set to boost the local car assembly business, which rides on
tax exemptions that the government has offered to attract investors and
create jobs.
Imports of vehicle parts are exempted from
the 25 per cent tax levied on fully built units, helping dealers to
churn out cars at reduced prices.
Data from the Kenya
National Bureau of Statistics (KNBS) shows that 3,611 vehicles were
assembled in Kenya in the period to June, accounting for 40 per cent of
the new 8,915 units sold in the period.
This is less than the 52 per cent of new cars that were assembled locally in the same period last year.
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