Kenya’s Mobius Motors, the company that aimed to revolutionize the African automotive market with rugged, affordable SUVs, has entered voluntary liquidation after a year of unsuccessful rescue efforts.
The company has been facing a series of financial challenges including increasing debt and has struggled to pay its employees.
“At a meeting of the shareholders held on 5 August 2024, it was resolved to place the company under liquidation as per Section 393(1)(b) of the Insolvency Act and appoint KVSK Sastry as the liquidator to wind up the company,” read a notice from Mobius director Nicolas Guibert.
Founded a decade ago(2009) by London-born Joel Jackson, Mobius Motors sought to meet the need for durable, low-cost vehicles in Africa. The company produced boxy, no-frills SUVs priced at 1.3 million Kenyan shillings (approximately $10,000), significantly cheaper than imported second-hand SUVs.
The startup built 50 units of its first model after which it released Mobius II in 2018 and Mobius III in 2021.
The company raised $56 million over its lifetime. However, it could not overcome several critical hurdles:
- Small market for new vehicles
Kenya’s market for new vehicles is limited due to the expensive nature of brand-new vehicles. Consumers overwhelmingly prefer second-hand models imported from the UK, Japan, and other Asian countries. Although Mobius built 50 units of its first model at a fair price, the Kenyan market’s preference for second-hand vehicles made it difficult for the company to gain a strong foothold. - High cost of production
High production costs, coupled with the relatively low purchasing power of the target consumers, strained the company’s financial resources. Efforts to keep prices low while maintaining quality added to the financial pressure and ultimately the company’s decline. - Product-market fit
Although Mobius aimed to meet the needs of African consumers with its rugged design made for rough terrains, the execution did not fully align with market demands. Updated editions with extra features did not significantly boost sales as anticipated. Moreover, the Mobius vehicle’s design for rough terrain did not align with the needs of the average Kenyan. - External economic challenges
The company faced external economic challenges, including tax hikes in Kenya that made the business model unsustainable. These tax increases significantly impacted the company’s viability, a source at one of the company’s shareholders told Reuters. - Failed relocation plans
To mitigate some of the challenges faced by Mobius, including tax hikes and a low uptake of their vehicles, shareholders considered relocating production to another country. However, the logistical difficulties of moving the existing assembly line from Nairobi made this option unfeasible, sealing the company’s fate. - Competition
Mobius Motors was part of a broader push to create jobs through home-grown vehicle manufacturing in Africa. Apart from their production and financial challenges, the company faced competition from other companies in this space including Uganda’s Kiira Motors, Ghana’s Kantanka, and Nigeria’s Innoson Motors. Moreover, global automakers like Toyota and Volkswagen have also increased their investments in African markets meaning that Mobius not only had to contend with cheaper second-hand imports but had to face off against these global giants.
What next for Mobius?
Creditors are scheduled to meet on August 15 to vote on the voluntary liquidation of Mobius Motors. This meeting will mark the final chapter for the ambitious venture that once promised to transform Africa’s automotive landscape.
