CFAO Mobility Kenya has taken a controlling stake of 99.4 percent in Thika-based Kenya Vehicle Manufacturers (KVM) after investing Sh2.4 billion in the assembler.
The injection of new capital by CFAO resulted in a major dilution of its partners, CMC Holdings and the National Treasury, which now hold 0.3 percent each in KVM.
For decades, the assembler’s largest shareholder was the National Treasury with a 35 percent stake, followed by CMC Holdings (32.5 percent) and DT Dobie (32.5 percent).
DT Dobie and Toyota Kenya merged in April 2023 to create CFAO, which inherited the KVM stake and in 2024 took the first step to raise its ownership by investing Sh882 million in the assembler.
Driving control
‘We own a 99.4 percent stake in KVM. The government and CMC own 0.3 percent each,’ Arvinder Reel, the chief executive of CFAO, told Business Daily.
‘Our initial investment in KVM was Sh882 million. We then added Sh1.6 billion.’
CMC Holdings, which used to assemble some of its models at KVM, announced in January 2025 that it was shutting down operations after steadily shedding motor vehicle franchises to focus on agricultural equipment. Manufacturers whose products it distributed have since had to seek new distributors in the Kenyan market.
The dilution of the Treasury’s ownership in KVM indicates that the government intends to let the private sector take a leading role in the industry, which it is supporting through incentives and the anticipated National Automotive Policy.
CFAO plans to make additional investments in KVM to make it the centre of its assembly operations, reducing its reliance on Mombasa-based Associated Vehicle Assemblers (AVA), which is owned by rival Simba Corp.
CFAO produces multiple models at AVA, including the Toyota Hiace and Toyota Fortuner. On Friday, the dealer commissioned a new Toyota Hiace assembly line at KVM, marking a second production site for the van after AVA, which started rolling out the model in December 2021.
‘KVM … officially commissioned a new Toyota Hiace assembly line at its Thika manufacturing facility, marking a significant milestone in Kenya’s automotive industrialisation journey and reinforcing the country’s position as a leading vehicle manufacturing hub in East Africa,’ CFAO said in a statement on Friday.
‘The new assembly line forms part of a broader modernisation and expansion programme supported by a Sh2.4 billion investment by CFAO Mobility Kenya in KVM. The project underscores a long-term commitment to local manufacturing, technology transfer, skills development and job creation while supporting Kenya’s industrial growth agenda.’
The new assembly line signals growing demand for the van, which is popular among public service transport operators. The vehicle is also used by traders to transport light cargo and by tourism operators to ferry visitors.
CFAO sold 1,176 units of the van in the year ended December 2025, a 65.1 percent increase from 712 units a year earlier, according to data from the Kenya Motor Industry Association (KMI), which represents new motor vehicle dealers.
The Toyota Hiace is among several models assembled locally by the dealer. Others include Hino trucks, Toyota Hilux pick-ups and the Toyota Fortuner sport utility vehicle (SUV).
Market growth
CFAO’s increased investment in KVM is expected to boost output in the medium term. The plant’s capacity utilisation had declined to a low of two percent in 2017, according to data from the Kenya Association of Manufacturers (KAM) and the Kenya Revenue Authority (KRA).
Isuzu East Africa operates one of the busiest assembly plants at its Nairobi headquarters, where it exclusively produces models from its Yokohama-based parent company, Isuzu Motors Limited.
However, all assemblers are still operating at capacity utilisation rates of less than 30 percent, with most vehicles imported fully built, including used cars from markets such as Japan.
Local vehicle assembly has been supported through government incentives, most notably exemptions from import duty (35 percent) and excise duty (25 percent to 35 percent) levied on fully built imports.
Assemblers import completely knocked down (CKD) kits, which they assemble locally, while also sourcing some components such as batteries, suspension parts and upholstery from domestic suppliers.
These incentives have spurred new investments in vehicle assembly and parts distribution by both established and new players.
Besides Kenya, assemblers have increasingly sold their vehicles to neighbouring markets such as Uganda and Tanzania.
Kenya is the largest new vehicle market in East Africa, with KMI data showing that sales by formal dealers reached 13,295 units last year.
Sales in Tanzania are about half of Kenya’s, according to statistics from the Tanzania Motor Traders Association (TMTA).
Uganda ranked third with sales of 3,284 units, according to data from the Uganda Motor Industry Association (UMIA).
Total new vehicle sales in each of the three markets are slightly higher than industry statistics indicate because some dealers are not members of the respective associations.