Local company gets green light for Kia assembly (Ethiopia)

Local company gets green light for Kia assembly (Ethiopia)

Belayab Motors, a local company in the automotive industry, has inked a deal with Kia Motors Corporation, a South Korean car manufacturer, over an assembly partnership. This will place Belayab in the position to locally assemble vehicles manufactured by Kia.

The two partners made the deal at a signing ceremony held at the Golden Tulip Hotel, off Cameron Street, on September 22, 2016.

The deal will see the introduction of Kia’s first car assembly plant in East Africa.

“As one of the exciting brands in the world today, Kia offers some of the best looking, high quality vehicles to its customers and we are excited to bring our products to Ethiopia with this partnership,” said Soon Nam Lee, Kia Motor’s president of Middle East and Africa regional headquarters.

Kia’s global production capacity stands at 3.08 million units a year. The total value of the Kia brand has grown by 224pc since 2010 – rising from 1.5 billion dollars to 5.7 billion dollars.

Following the deal, Belayab will invest close to 150 million Br. It will start its assembly at its factory in Adama, which rest on 30,000sqm of land. It plans to complete the dedicated assembly facility by January 2017. The facility will have the capacity to assemble 12 cars a day in a single shift. This will also give Belayab the capacity to assemble 3,000 vehicles each year.

For the past ten years, Belayab has been active in Ethiopia’s nascent automotive industry. In addition to its plant in Adama, it established maintenance workshops in four locations across the capital. It is also in the process of adding more workshops – in Hawassa and Bahir Dar.

“This agreement with Kia is a testament to our unwavering efforts towards accelerating the growth of the local manufacturing industry,” Fekadu Girma, general manager of Belayab Motors said, speaking at the signing ceremony.

Since 1998, the country has licensed 31 foreign vehicle assembly plants and 73 domestic vehicle assembly investments, which bring the total number of assemblers to 104. But only 18 of those licensed became operational. Currently, the production capacity of car assemblers in the country has reached over 6,000 units a year.

The ever growing demand of vehicles in the Ethiopian market is still dominated by the import of second hand vehicles. In 2009, Ethiopia imported 231.4 million dollars’ worth of vehicles. Six years later, this figure surged to 845.8 million dollars – 60pc higher than the previous year. In the same year, the government managed to collect an import tax of 417 million dollars from – 40pc higher than the previous year.

Looking at the volume of imported cars last year, 38,288 units were imported – a 54pc jump in comparison to the preceding year.

But still Ethiopia’s motorisation rate is one of the lowest in the world. A thousand people share six cars in Ethiopia, according to a study by Deloitte conducted in 2015.

“This kind of partnership improves the domestic vehicle assembly companies by facilitating the transfer of global knowledge and experience,” Alemu Sime, State Minister of Industry, said.