After just over 10 years in Kenya's nascent car assembly business, Mobius Motors, a Kenyan company famous for its rugged SUVs optimized for Africa's rough terrain, is closing shop.

Established by a UK-born businessman, who fell in love with Kenya's challenging landscape, Mobius Motors has been carving its niche, building the country's nascent vehicle assembly business.

But, with piling financial pressures, Mobius Motors has announced it had to make a difficult decision to slam the breaks on its operations.

"Notice is hereby given that a meeting of the creditors will be held on 15 August 2024 at 9am at Mobius Factory to consider, and if thought fit, to pass a resolution approving the shareholders' nominee as the Liquidator of the Company as per Section 408 of the Insolvency Act," a statement signed by Mobius Motors Kenya Ltd Director, Nicolas Guibert states in part.

Mobius Motors was born out of a simple yet powerful vision: to create a vehicle that could withstand the rigours of African roads while remaining affordable to the average consumer.

The brainchild of Joel Jackson, a British investor who came up with the idea after navigating Kenya’s rough roads during his time at a forestry company, Mobius Motors sought to build vehicles that were as tough as the land they were designed to conquer.

Mobius Motors' flagship product, a no-frills SUV, was priced at Kes1.3 million (about$13,000 at the time), a considerable bargain compared to the cost of importing second-hand SUVs in the country.

Pricing strategy

This pricing strategy was intended to open up the market to a wider range of consumers, particularly those who needed a durable vehicle but couldn’t afford more expensive options.

However, the road to success proved more challenging than anticipated. While Mobius Motors made a name for itself with its innovative approach, the company struggled with financial viability.

According to a statement by the company and a source from one of its shareholders who spoke to Reuters, the financial challenges became insurmountable, leading to the decision to cease operations.

One of the biggest factors contributing to the firm's financial difficulties was a series of tax hikes in Kenya, which threw the company’s business model out of balance.

The source, who wished to remain anonymous, explained to Reuters that these tax increases made it increasingly difficult for Mobius Motors to maintain its pricing strategy while staying afloat.

The rising costs of production in Kenya, coupled with stiff competition from cheaper second-hand car imports, steadily eroded Mobius Motors' margins, making it difficult to sustain operations.

Mobius Motors was not alone in facing these challenges. The broader African automotive industry, particularly homegrown manufacturers, has struggled to compete with the influx of imported vehicles.

These imports, often more affordable due to their second-hand nature, have consistently outpaced the sales of locally manufactured vehicles.

In an effort to keep the business alive, the company’s owners considered relocating production to another country. However, this idea was ultimately dismissed due to the logistical challenges of moving the existing assembly line from Nairobi.

The complexity and cost of such a move, coupled with the uncertainty of finding a more favourable operating environment, led the company to conclude that shutting down operations was the most viable option.

"We visited the leadership of the company [Mobius Motors] led by the Kenyan Director, Mr John to understand the causes of the winding up," the PS, State Department for Investment Promotion Abubakar Hassan stated in X (formerly Twitter) on Wednesday this week, as the government attempted to rescue Mobius Motors' sinking boat.

"We explored corporate recovery, restructuring, and rescue mechanisms that can be exploited in such circumstances. Going forward, we are coming up with a program to assist such companies get strategic investors who are interested in distressed brownfield investment opportunities," the PS added.

The decision to close the Nairobi plant is particularly poignant given Mobius Motors’ role in a broader movement to boost local manufacturing in Africa. The company was part of a wave of initiatives by both investors and governments to create jobs and build industrial capacity across the continent.

Similar ventures included Uganda’s Kiira Motors, Ghana’s Kantanka, and Nigeria’s Innoson Motors. These companies, like Mobius, aimed to harness local talent and resources to build vehicles designed for African markets.

Mobius Motors' flagship product, a no-frills SUV, was priced at Kes1.3 million (about$13,000 at the time), a considerable bargain compared to the cost of importing second-hand SUVs in the country.

A Crowded Field: Global Giants and Local Challenges

 

While Mobius Motors and other local manufacturers fought to establish themselves, global automotive giants such as Japan’s Toyota Motor Corporation and Germany’s Volkswagen AG were also expanding their presence in Africa.

 

These companies recognized the potential of African markets, driven by growing economies and rising consumer demand. However, they too faced the formidable challenge of competing with second-hand imports, which dominate the market in many African countries.

 

For Mobius Motors, the competition from these global players, combined with the financial strain caused by local economic policies, proved too much to overcome. The company’s struggle highlights the difficulties faced by local manufacturers in establishing a foothold in an industry dominated by well-established international brands.

 

The End of an Era: What’s Next for Mobius Motors?

 

As Mobius Motors prepares to wind down its operations, the company’s creditors are scheduled to meet on August 15th to vote on voluntary liquidation. This move, though necessary, signals the end of a bold experiment in African automotive manufacturing.

 

Mobius Motors’ closure is a sobering reminder of the challenges faced by local entrepreneurs in a globalized economy, particularly in industries with high capital requirements and fierce competition.

 

Despite the disappointment of Mobius Motors’ closure, the company’s story is not without its successes. Over the past decade, Mobius Motors demonstrated that it is possible to design and produce vehicles specifically for African conditions.

 

The company’s SUVs, with their rugged design and competitive pricing, were a testament to the ingenuity and determination of entrepreneurs in Africa.

 

The closure of Mobius Motors raises important questions about the future of automotive manufacturing in Africa. What will it take for local manufacturers to succeed in a market dominated by imports and multinational corporations?

 

One key lesson from the Mobius experience is the importance of a supportive policy environment. Without favorable tax policies and incentives, local manufacturers will continue to struggle to compete on price with imported vehicles.

 

Another lesson is the need for greater investment in local supply chains. Mobius Motors, like many other African manufacturers, relied heavily on imported components, which added to production costs and made the company vulnerable to fluctuations in exchange rates and global supply chains.

 

Building a robust local supply chain could help reduce costs and make African manufacturers more competitive.

 

Finally, the story of Mobius Motors underscores the importance of market research and understanding consumer needs. While the company’s vision of a rugged, affordable SUV was well-suited to African conditions, it faced challenges in convincing consumers to choose a locally-made product over imported alternatives.

 

Future ventures may need to invest more in marketing and consumer education to build trust and loyalty among local buyers.

 

As the African automotive industry evolves, the lessons learned from Mobius Motors’ journey will be invaluable. While the road ahead may be challenging, with the right policies, investments, and entrepreneurial spirit, that dream may yet become a reality.

 

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