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Volvo Expands Truck Building Into Fast-Growing East Africa

Volvo AB’s trucks division is seeking to boost market share in Kenya, Uganda and Tanzania to as much as 18% from about 2%, as the regional economic growth for East Africa outpaces the average for sub-Saharan Africa.

The Swedish maker of trucks and construction equipment agreed to partner with Kenyan car dealer Necst Motors to set up 20 new workshops across the region, a parts warehouse and an assembly line for Volvo trucks in Kenya’s port city of Mombasa, Volvo Trucks President Claes Nilsson said May 18. That followed Volvo’s announcement that it will start assembling cars in India later this year.

“In all markets, we want to be above 10%,” Nilsson said in an interview in the Kenyan capital, Nairobi. “Eventually, we want to get to those levels that you see in Morocco and South Africa.”

Kenya will follow those two countries as the third in Africa to have a Volvo Trucks assembly plant. East Africa’s largest economy is expected to grow 5.3% this year, compared with a sub-Saharan Africa average of 2.6%, according to the International Monetary Fund. Uganda and Tanzania are seen expanding 5% and 6.8% respectively.

“We believe very strongly in the growth of the Kenyan economy and also the surrounding countries of Tanzania and Uganda,” Nilsson said. “We are pleased to see what the government is doing in terms of investment in infrastructure, which is a necessity for customers to utilize the benefits of our products.”

Volvo trucks are assembled in 15 countries across the globe and last year, the company sold about 103,000 trucks worldwide, Volvo President for Southern Africa Torbjorn Christensson said during the interview. The company last year completed a reorganization to cut annual spending by 10 billion kronor ($1.1 billion) from 2012 levels.

In Kenya, the company plans to focus on the construction and mining industries, in addition to long-distance haulage that has been its mainstay, Volvo Trucks Director for East Africa Micke Rydbeck said during the interview.

By Eric Ombok
Bloomberg News


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