Kenya's first locally manufactured car Nyayo Pioneer I, championed by President Daniel arap Moi was never driven beyond the assembly plant yard at the Nairobi railway headquarters.
Moi's project then was more of a political adventure that an attempt at industrialisation. The project gobbled millions but no car ever left the plant.
A second attempt at a homegrown vehicle has floundered 13 years down the line bogged by low demand for new vehicles in the country, high debt portfolio and a legal tussle with KRA.
Kenya’s only homegrown vehicle assembler, Mobius shut its plant on Monday and instead opted for voluntary liquidation.
As of 2020, the company had more debt than assets to cover those debts. By then it had already accumulated a debt of Sh649.2 million and shareholders’ deficit of 389.1 million.
This saw the firm struggle to settle suppliers and pay salaries as debts from its operations rose with towards local automobile assembly doing little to salvage the situation.
Mobius’s Director Nicolas Guibert on Monday evening issued a creditors’ voluntary insolvency notice, saying the decision followed a stakeholder meeting earlier in the day.
“At a meeting of the shareholders held on 5-Aug-2024, it was resolved to place the company under liquidation as per Section 393 of the Insolvency Act and to appoint KVSK Sastry as the liquidator to wind up the company,” read the notice.
Liquidation involves bringing a business to an end and distributing its assets to claimants. It occurs when a company is insolvent – when it cannot pay its debts.
Guibert said KVSK Sastry has been appointed to oversee the liquidation process.
Kenya’s Insolvency Act 2015, allows companies to wind up if the board resolves “by special resolution that it be liquidated voluntarily.”
This even as Dealers of new vehicles in the country continue to recorded a drop in monthly sales with high end brands moving the least, as Kenyans continue to prefer cheaper imported second-hand units.
The notice adds that that a list of creditors and proxy forms will be released for inspection on Friday, August 9, at Mobius’s head office at the Sameer Business Park in Nairobi.
During liquidation, the remaining company assets are used to pay creditors and shareholders based on the priority of their claims.
Mobius Motors was founded by British businessman Joel Jackson in 2010 and its first car was unveiled in 2014.
Mobius, which raised $56 million (Sh7.3billion) across five rounds, manufactured low-priced SUVs targeting SMEs in infrastructure, agribusiness and supplies operating in remote areas, and needed vehicles that could withstand rough terrains.
The compact SUV, Mobius, was met with mixed reactions from Kenyans, with some criticising its stripped-down look despite its Sh1.3 million price tag then.
The automaker has since followed it up with Mobius II and Mobius III models, which are spruced-up but still rugged SUVs priced at Ksh.1.5 million and Ksh 3.9 million respectively as of 2022.
Over the years, it has also received funding from Chandaria Industries, the U.S. International Development Finance Corporation and PanAfrican Investment, a private investment firm.
Kenya’s car market is dominated by used imports from Japan and the government has been striving to boost local vehicle assembly, attracting investments from global automakers such as Volkswagen.
Even so, the sale of new vehicles in Kenya dipped 15 per cent last year.
Data from the Kenya Motor Industry Association last month showed that individuals and businesses bought 11,370 units in 2023, down from 13,352 units sold in 2022.
Dealers attributed the drop to high inflation and the depreciating shilling, which shot up the prices of products as well as production costs.