Kenya in Deal to Lower Cost of Cars

Kenya and Germany have entered into a new cooperation agreement, which will see an increase in local vehicle production in the country, with a particular focus on improving affordability through local assembly.
Alexander Fierley, Germany’s Deputy Ambassador to Kenya and Trade Counsellor, highlighted the agreement during his visit to the Kenya Vehicle Manufacturers (KVM) facility in Thika on Thursday, August 21.
He specifically commended CFAO Mobility Kenya for supporting KVM in resuming local assembly of ‘German machines’, including Volkswagen brands such as the Touareg, Tiguan and T-Cross, under a Completely Knocked Down (CKD) arrangement.
“Germany recognizes the critical role that the automotive industry plays in economic development,” Fierley said.
“Our renewed cooperation with Kenya seeks to build stronger linkages between our industries, foster innovation and technology transfer, and support the country’s local manufacturing ambitions and regional competitiveness.”
While welcoming the renewed partnership, CFAO Mobility Kenya Managing Director, Arvinder Reel stated that the investment in KLM was aligned with efforts to improve access to vehicles through local assembly.
“Through our investment at KVM, we are providing more job opportunities, offering skills transfer from global OEMs, supporting local suppliers through increased content input, and making vehicles more affordable for Kenyan consumers,” Reel said.
The fresh cooperation is expected to unlock opportunities for investment in the local automotive industry including technical training, mobility initiatives and production of parts.
Local assembly of vehicles is largely seen as a key strategy to reduce the cost of vehicles in Kenya by lowering import-related expenses while also promoting the use of local labour.
At the moment, the KVM assemblesa range of vehiclesacross various brands like Mercedes Trucks and Buses, Volkswagen, Sinotruk, Tata, Renault (via Caetano), Hyundai, JMC, BasiGo electric buses, MAN (via Mobikey), Foton, Eicher (via GB Auto), Kinglong, and UD Trucks (via IEA).
Vehicle assembly is likely to gain popularity in the coming months, particularly with the complications associated with importing vehicles from abroad. In May 2025, there was a raging debate on imports after the Kenya Revenue Authority (KRA) announced plans to implement the new Current Retail Selling Price (CRSP) schedule, changing how customs duty on imported second-hand cars is calculated.
Instead of using a fixed retail price,the KRA will now base taxes on the actual price paid for the vehicle, making valuations more accurate and fair.
This represents a major shift from what was done previously, where the CRSP system used fixed values that sometimes overestimated car prices, leading to higher import taxes.