Foton East Africa’s Nairobi car assembly plant is set to be auctioned to repay debts. The assembly is estimated to be worth around Sh. 1.2 billion.
A public auction notice has invited bids for the 10 acres on which Foton’s warehouse sits. The assembly is situated along the Old Mombasa Road.
The plant features a body building area, painting section, a completely knocked down (parts) area and a vehicle assembly line with cranes.
Foton had entered the Kenyan market in 2011 through imports of fully built motor vehicles, including trucks, vans, buses and pick-ups. It then acquired the land to build an assembly plant with a capacity to churn out 10,000 vehicles for the local and regional market.
Foton’s foray into the local market has been characterized by business disputes which have included failure to pay taxes that led to the seizure of its CKD imports by the Kenya Revenue Authority (KRA).
On the assembly plant, Foton had anticipated to produce 10,000 vehicles for the local and regional market.
The local assembly plan was informed by a tax incentive exempting completely knocked-down (CKD) units from the 25 per cent import duty charged on purchase of fully built vehicles.
While Foton awaited its assembly plant to be ready, it contracted Thika-based Kenya Vehicle Manufacturers (KVM) to assemble its brands.
The two companies fell out in 2012, with Foton opting to run an assembly operation at its Mlolongo plant on a smaller scale than initially planned.