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Focus: Carmakers lure ride-hailer, delivery drivers in Africa

Reuters  |  NAIROBI 

By Duncan Miriri

(Reuters) - At Motor Corp's showroom in the Kenyan capital, hundreds of its compact cars are waiting to be collected.

Most of the customers are drivers for ride-hailing company Uber Technologies, which struck a loans and discount deal with the Japanese carmaker and South Africa's Stanbic Bank, at the beginning of the year.

should be a huge growth market for automakers. Transport links are is low. There are 25 cars per 1000 Kenyans compared to 786 in the United States, according to the But many in cannot afford to buy a vehicle, particularly just for personal use.

The deal in Kenya, soon to be extended to and Tanzania, offers financing of up to 100 percent for top-rated Uber drivers and a price of 850,000 Kenyan shillings ($8,349.71), lower than the usual 950,000 shillings. The loans are repaid with the money the earns providing services.

Patrick Amenya, the at CMC Motors, the local franchisee, said the deal had helped him sell "more vehicles than normally we would." sold 523 Altos in this year.

Auto companies are linking up with fast-growing ride-hailing or delivery services around the world, aiming to transform a threat to their business into a growth opportunity. They offer discounts or financing deals for drivers in the hope they will pick their cars or vans, which could also encourage their clients to buy them.

has invested in U.S. firm and Toyota is also backing Uber. Japan's is also an investor in Uber and Southeast Asia's ride-sharing app

Five blocks from CMC in Nairobi, at Toyota Motor Corp's showroom light trucks and bikes are waiting for buyers. Some of these are drivers for Sendy, a company. Like Uber, its drivers own their vehicles.

Companies are becoming less likely to buy their own fleet of trucks, preferring a delivery service instead, said Dennis Awori, the of Toyota East Africa, a investor.

Toyota provides with a pipeline of truck owners. At the moment there is no financing deal or discount but Awori and Malaika Judd, Sendy's chief operating officer, said this was under consideration.

SECOND HAND MARKET

Suzuki's strategy has propelled it from the bottom of sales tables in Kenya, where it languished for decades with emerging brands from China, to the top five along with Toyota, Isuzu, and

Koichi Suzuki, Suzuki's manager for the and Africa, hopes it will soon have the edge over the others. The company is planning to adopt the same strategy in other markets.

The Altos, which are tough and fuel-efficient, at CMC are made in but could one day be made in Africa, Suzuki said.

is often a springboard for the rest of and Uber, operates in seven African nations and 13 cities, offering employment to more than 100,000 drivers.

"When you have a success story in one country in Africa, we can help to develop to a pan-African scale," said Richard Bielle, of Toyota's business in Africa.

Germany's Volkswagen AG, invested $50 million in a plant in this year to assemble its Polo, and Terramont models. It also set up a ride-hailing app called as no other service is available there yet.

"Most of the people might not be able to afford a so the question is how do we do satisfy that market?," said Michaella Rugwizangoga, of

"Our business model is to use the locally assembled VW vehicles to deliver our solutions for two years and sell them as second hand cars to the market."

NEW CAR

Kenya's is dominated by second-hand imports, said Mariane Ochieng, Stanbic's of vehicle and

New vehicles are perceived as being out of reach of many buyers, mainly due to the higher taxes that they attract, she said.

Like millions of other young Kenyans, 25-year old was forced into self-employment after a for work when he finished secondary school in 2011.

He turned to a pre-owned vehicle imported from which he hired at 50,000 shillings ($490.44) a month, and signed up on Uber to carry customers.

The company shared Wanyoike's data on number of trips, earnings and his rating of 4.7, near the maximum that is 5.0, with This earned him a loan for a new Alto, allowing him to save money on fuel and more easily navigate Nairobi's clogged streets.

"I'm very happy because I could not afford a new car," he said.

After the Alto's success, has started discussions with Uber to increase the range of models available.

"Everybody was a bit nervous about whether it could work but now we are all seeing the possibilities," said Amenya.

(Editing by Anna Willard)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, November 09 2018. 15:16 IST
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