By Benadeta Mwaura - Reporter
Kenya, 13 January 2026 - Kenya’s automotive industry is at a critical inflection point, with policymakers, industry players and investors urging bold implementation of strategic reforms to unlock the sector’s full economic potential.
The call comes amid fresh government initiatives and regional trade opportunities that could elevate local vehicle assembly and parts manufacturing, and create thousands of jobs.
In a recent report, the chair of the board and managing director of Isuzu East Africa Rita Kavashe, argued that Kenya’s vehicle assemblers are “strategically positioned to serve customers in the region and beyond,” provided that supportive policy frameworks are enacted and enforced.
She highlighted two key policy priorities: giving preference to locally assembled vehicles in public procurement, and supporting the implementation of the Local Content Bill 2025 that mandates 60 per cent local sourcing in infrastructure projects.
The government has already rolled out the Kenya National Automotive Policy, a comprehensive strategy aimed at revitalising the sector by promoting local vehicle assembly and gradually reducing dependence on imported used vehicles, a dominant segment of the Kenyan auto market.
The policy includes tax incentives, duty remission schemes and measures to regulate the importation of parts like batteries, radiators and brake fluids to encourage local manufacturing.
Cabinet Secretary for Investments, Trade and Industry Lee Kinyanjui said the policy is designed to create a thriving automotive ecosystem, foster backward and forward linkages, and support job creation and skills transfer.
Plans include raising a Sh13 billion affordable credit facility to enable local players to access financing for scaling operations.
Industry stakeholders have welcomed these steps but stress that effective implementation and consistent enforcement are essential for the policy to yield results.
This includes ensuring locally manufactured products and assemblers are truly integrated into government procurement programmes, an idea pushed strongly by private sector leaders.
Recent data shows signs of movement in what has historically been a challenging sector. Government interventions and incentives have helped revive local assembly activity. In the first half of 2025, Kenya’s vehicle assembly output rose 16.4 per cent year-on-year, producing about 6,723 vehicles, a rebound after several years of stagnation.
The growth was supported by duty exemptions on imported parts and financing arrangements such as Samurai bond funding from Japan.
Moreover, local vehicle assembly has grown steadily over the past seven years, with manufacturers increasingly relying on domestic operations rather than imports. Officials report that nearly 85 per cent of production in some segments is now done locally, driven in part by programmes such as “Buy Kenya, Build Kenya.”
The broader market performance also reflects recovery in demand.
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A recent industry snapshot showed vehicle sales in Kenya jumped by more than 22 per cent in 2025, indicating renewed consumer and business confidence following tight credit conditions and delayed government payments in previous years.
Kenya’s automotive ambitions extend beyond domestic demand. With the African Continental Free Trade Area (AfCFTA) opening markets across the continent, local assembly plants could become regional supply hubs, exporting vehicles and parts to neighbouring East African Community (EAC) states and beyond.
This hinges on harmonising policies across borders and ensuring that regional partners do not enact policies that undermine integration.
Local content requirements in major infrastructure projects, such as transport corridors and energy expansions, could also spur deeper industrial growth if strictly enforced.
Advocates say a structured audit of local sourcing could help Kenya “secure meaningful industrial growth and maximise benefits from investments across sectors.”
Beyond assembly, the automotive sector has wide value-chain potential, from spare parts manufacturing and servicing to aftermarket retail and financing.
Governments and industry players highlight that a vibrant automotive industry could create hundreds of thousands of direct and indirect jobs as local technology and skills develop.
Partnerships with international firms, such as Kenya Vehicle Manufacturers (KVM) resuming production of Volkswagen models locally, signal renewed confidence from global automotive players and help facilitate technology transfer.
Despite progress, several hurdles persist. Production volumes remain modest compared with regional peers, and used vehicles still dominate the Kenyan market due to consumer preference and cost advantages.
According to industry analysts, total vehicle assembly in 2024 dropped to the lowest levels since 2021 before a modest rebound in early 2025.
Meanwhile, players like Mobius Motors, a Kenyan automaker focused on low-priced SUVs, have struggled to sustain operations, illustrating the difficulties of competing with imported vehicles and achieving economies of scale.
Experts say Kenya’s automotive future will depend on consistent policy execution, private-public coordination and effective utilisation of regional trade frameworks like AfCFTA.
With targeted implementation of the Local Content Bill and stronger linkage of government procurement to local assembly incentives, Kenya could move closer to realising its vision of a competitive, export-oriented automotive hub in East Africa.
