Sales of Isuzu East Africa’s sport utility vehicle (SUV), the seven-seater mu-X, surged by 483.3 percent to 105 units in the first half of 2026 compared to 18 units during the same period the previous year. This sharp rise follows the commencement of local assembly, which has enabled the company to reduce prices while improving the vehicle’s features.

A source within Isuzu explained that the price reductions, coupled with added features and a five-year warranty, have significantly boosted demand. The company is targeting a niche of approximately 10,000 Kenyan buyers who typically spend between Sh8 million and Sh10 million on used SUVs.

Assembly Incentives Drive Competitive Pricing

Isuzu offers the mu-X with either a three-litre or 1.9-litre diesel engine. Local assembly benefits from several tax incentives, including exemptions from the 35 percent import duty on fully built imports and excise duty, which ranges from 20 to 35 percent depending on engine size and fuel type.

Additional cost savings come from reduced Import Declaration Fees (2.5 percent versus the standard 3.5 percent) and a lower Railway Development Levy (1.5 percent instead of 2 percent). These incentives can reduce vehicle costs by millions of shillings, allowing manufacturers to price their models more competitively or improve profit margins.

Industry-Wide Shift Toward Local Assembly

The impact of local assembly is evident across the industry. CFAO Mobility Kenya, for instance, lowered the price of the Toyota Fortuner from Sh13.2 million to Sh10 million after starting assembly operations in Mombasa in 2023. This price adjustment has made new locally assembled SUVs more competitive against used imports, which sell for around Sh6.5 million for eight-year-old models.

In June 2026, locally assembled vehicles accounted for 92.3 percent of new vehicle sales, a substantial increase from below 70 percent six years ago. Formal dealers are reducing imports of fully built vehicles from markets such as Japan and South Africa, focusing instead on expanding local assembly to capitalize on tax incentives and government support under the Buy Kenya-Build Kenya strategy.

Despite the growth in local assembly, used imports, particularly Japanese models like Toyota, continue to dominate the broader Kenyan car market.