From Used Imports to Zero Mileage: Kenya's Matatu Market Is Changing

Compagnie Française de l'Afrique Occidentale CFAO Mobility Kenya has reshaped the country’s passenger transport market through a strategy that combined market research, local assembly, and competitive pricing. The company identified an opportunity within the informal matatu sector, where operators have traditionally relied on imported second-hand vehicles.

For many years, buying a brand-new Toyota Hiace Commuter was beyond the reach of most matatu investors. High import duties on fully built imported vehicles pushed showroom prices far above those of used imports arriving from overseas markets.

That changed in 2021 when Toyota by CFAO Mobility Kenya announced a significant reduction in the price of the Toyota Hiace H200 Commuter. The new retail price of about KSh4.51 million matched the cost of an eight-year-old imported used Hiace.

The move surprised many players in the motor industry. Some dealers who specialize in imported used vehicles questioned whether the pricing strategy would succeed, arguing that buyers would continue to prefer second-hand imports over new vehicles.

The lower price became possible after CFAO Mobility Kenya shifted production to local assembly using Completely Knocked Down (CKD) kits. This approach allowed the company to benefit from government incentives designed to support local vehicle manufacturing.

In June 2021, CFAO Mobility officially commissioned its first dedicated Toyota Hiace assembly line at the Associated Vehicle Assemblers plant in Mombasa. The facility assembled Hiace vans locally instead of importing them as fully built units.

Under the government's industrial policy, CKD kits qualified for zero-rated import duties and excise tax exemptions. These incentives reduced production costs, allowing the company to pass much of the savings directly to customers.

The pricing change immediately made brand-new vehicles more attractive to transport investors. Instead of purchasing an older imported van with an unknown service history, operators could acquire a new vehicle backed by manufacturer support and warranty.

The strategy also aligned with the needs of schools, shuttle operators, tour companies, and businesses that required dependable passenger transport. Buyers gained access to vehicles that offered improved reliability, lower maintenance costs, and modern safety features.

The results were reflected in sales performance. By 2025, annual Toyota Hiace sales had reached 1,176 units, representing a 65.1 percent increase from the 712 units sold in 2024. The growth highlighted rising confidence in locally assembled vehicles.

The increasing demand created the need for additional production capacity. In June 2026, CFAO Mobility launched another Hiace production line worth KSh2.3 billion at the Kenya Vehicle Manufacturers plant in Thika to support the expanding market.

The new investment strengthened Kenya's automotive manufacturing sector while creating opportunities for suppliers, technicians, and other businesses connected to vehicle assembly. It also reinforced the government's efforts to promote local industrial production.

The matatu industry has been one of the biggest beneficiaries of this shift. Fleet owners increasingly prefer purchasing new Hiace vans because they offer predictable operating costs, better fuel efficiency, and reduced downtime compared to older imported models.

According to industry observations, more than 90 percent of Toyota Hiace Commuter vans purchased for matatu operations today are brand-new, zero-mileage units. This marks a significant change from previous years when imported used vehicles dominated the market.

The success of the Hiace programme demonstrates how market research, supportive government policies, and local manufacturing can work together to transform an industry. By identifying customer needs and adjusting its production strategy, CFAO Mobility Kenya has changed buying patterns in one of the country's most important transport sectors.