Kenya Seeks Policy Changes to Boost Automotive Industry

Kenya’s automotive industry faces a pivotal moment, with stakeholders advocating for the swift implementation of strategic reforms to maximize its economic contribution. New government initiatives and regional trade possibilities offer opportunities to expand local vehicle assembly and parts manufacturing, potentially generating numerous jobs.

Policy Recommendations and Government Initiatives

Rita Kavashe, chair of the board and managing director of Isuzu East Africa, has stated that Kenyan vehicle assemblers are well-positioned to serve regional and international customers, contingent upon the establishment and enforcement of supportive policies. Key priorities include prioritizing locally assembled vehicles in public procurement and supporting the Local Content Bill 2025, which mandates 60 percent local sourcing for infrastructure projects.

The Kenyan government has launched the Kenya National Automotive Policy, a comprehensive strategy designed to revitalize the sector. This policy aims to encourage local vehicle assembly and gradually decrease reliance on imported used vehicles, which currently dominate the Kenyan auto market.

Policy Components and Economic Support

The Kenya National Automotive Policy incorporates tax incentives, duty remission schemes, and regulations on the importation of components like batteries, radiators, and brake fluids to stimulate local manufacturing. Cabinet Secretary for Investments, Trade and Industry Lee Kinyanjui indicated the policy’s goal is to establish a robust automotive ecosystem, promote interconnectedness within the industry, and support job creation and skills development.

Plans are underway to establish a Sh13 billion affordable credit facility to provide local businesses with access to financing for expanding their operations.

Industry Response and Recent Performance

Industry stakeholders have expressed support for these measures, emphasizing the importance of effective implementation and consistent enforcement. Integration of locally manufactured products and assemblers into government procurement programs is a key concern for private sector leaders.

Recent data indicates a positive trend in the automotive sector. Government interventions and incentives have contributed to a resurgence in local assembly activity. Vehicle assembly output increased by 16.4 percent year-on-year in the first half of 2025, reaching approximately 6,723 vehicles, marking a recovery after several years of stagnation.

This growth was facilitated by duty exemptions on imported parts and financing arrangements, including Samurai bond funding from Japan. Local vehicle assembly has steadily increased over the past seven years, with manufacturers increasingly relying on domestic operations. Officials report that nearly 85 percent of production in certain segments is now locally sourced, partly due to initiatives like “Buy Kenya, Build Kenya.” The overall market performance also reflects a recovery in demand.