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Your Questions on matatu investment.

14 Jul

1)      In one of your blogs you said the government is no longer registering new 14 seater matatus. From my observation I have seen the new 14 seater Toyota matatu models having new number plates i.e. KBX, KBY, KBZ… though most of them function as shuttles carrying 11 passengers. Is this what you were referring to as it leaves me confused?

You can still import a newer Toyota, but only for long distance routes; and mostly a shuttle. The facing-off of 14 seaters was aimed at decongesting the cities especially Nairobi. Short distance routes/ saccos that operate within Nairobi and surrounding areas are not allowed to register new 14 seaters.

2)      Is the income from a matatu operating as a shuttle between let’s say Nairobi-Nakuru/Nairobi-Eldoret/Nairobi-Thika same as matatu operating as town service within Nairobi ?

It is tricky but the sums do add up in terms of income per month. What I mean is-A matatu plying the Nairobi- Ngong- Kitengera- Rongai or Ruiru route makes about 4000 shillings daily, while as, A shuttle makes three return trips in a week and makes a net of between 8000 and 10.000 per trip.

3)      Which one would be more preferably, in terms of vehicle maintenance, minimal wear and tear, profitability between a matatu covering long distance lets say Nairobi-Nakuru/Nairobi-Eldoret/Nairobi-Thika and one operating as town service within Nairobi?

A matatu plying a town service route is more expensive to maintain since it spends more time on the road. In most cases once you start the car in the morning, in will run from 6am to probably 10pm. But for shuttles, the flow is controlled and they have systems in place on how they regulate their operations.

The longest a trip can take is 4hrs- Nairobi to Eldoret. Meaning, less wear and tear which is = to low maintenance cost.

4)      Apart from the costs involved in importing the new matatu Toyota model and having it registered at the port (i.e. getting number plates) what are the extra costs that I will incur to have it run as a shuttle supposing I want it to be managed may be under North-Rift Shuttle/Eldoret Shuttle/Mololine Shuttle.

Once you import the vehicle, it must be registered before it leaves the port: you may probably change things like battery, Rims and tires, Fit the recommended seats depending on the route of choice- 14-11 and, you must have joined a Sacco or a transport management company which will cost you between 10 and 150.000 shilling registration fee.

5)      Are there scenarios whereby a rogue shuttle driver/the shuttle company remove/steal new parts from a new vehicle e.g. oil/fuel filters, tires, music system, plugs and replace them with old spare-parts thus in the long run I end up spending more on servicing and maintaining the vehicle?

This is just a myth and if at all it happens, it is in very isolated cases and most likely a collision involving a trustee or a manager who is most likely a relative of the vehicle owner.

As for company managed vehicles, there are various avenues to get some extra cash from a clients car and we try to keep the vehicle on the road most of the times.break-down means less revenue for the company and that is what we try to avoid.

6)      How much money would I dedicate per annum for servicing the 14/11 seater matatu and comprehensive insurance?

The insurance will depend on the value of the car, the number of passengers on board and things like that.

Servicing is per kilometers covered and like we said earlier, it will depend on the route. 6.000 Ksh per week is the maximum you can spend on servicing and that is enough to keep a town service vehicle on the road at all times. You might spend more at a single servicing {8.000} but in the long run you will equally spend less.

7)      What is the approximate payback time to recover my initial investment when I import the new matatu Toyota model and have it run either as shuttle or town service.

We approximate about 2.3m as the amount you will need to fully comply with all the requirements to put a new Toyota 7L on the road this include buying, importation, registration, fittings and all the necessary papers and also Sacco membership. If you would say, make 3500 every day, you can clear the loan in two years.

8)      I want a SACCO/Company to be managing the day to day affairs of running the vehicle, which one would you, recommend?

I can only vetch for the one I work with- Ongata Line transporters, although this is a town services provider- otherwise you need to make a date with your preferred Sacco and see what they are offering. Some companies like Mololine are more established and sell shares for membership. Although this is not to mean they are more profitable.

9)      I also have the option of teaming up with my friend and approaching General Motors for financing of the 33 seater NQR Bus. I have confirmed from GM that it’s going for 4.7M inclusive of branding, seats, seat belts, speed governor. You had mentioned in your blog that on top of this I need 500,000 comprehensive insurance and 200,000 for extras like TLB, Music System among others.

Going with this, at what point do I pay for the number plate?

Number plate is paid for by GM as the law only allows selling of registered vehicles. The price GM quoted include registration and inspection sticker valid for one year. General motors’ sells you a fully complied vehicle ready to start transporting passengers. The additional expenses are for optional, you can choose to just insurer your ride -as is-. This are just marketing tools we use to attract customers.

Are there any other government taxes?

Yes there is the advance tax which goes at 720 per seat. You multiply this by the number of seats in your vehicle. As for brand new 33 seater; I guess this tax is paid for by the seller either at your expense or part of the purchasing price. Confirm with General motors.

10)   Suppose I commit the maximum possible monthly income towards loan repayment is the bus able to fully service the loan or at times I will need to top up from my pocket.

If we are talking about a brand new minibus, the soaped up type {manyanga} the income is more than enough to service the loan and give you a monthly salary after paying for servicing and spare parts. At an average of 8000ksh per day which in this case is the minimum, you make around 240K in a month. The income can only be higher than this up to 270—300K.

11)   How much money will it cost to service the 33 seater per annum?

The first service is on General Motors- so there you have 11 months left maintenance cost will Depend on the distance and the trips the vehicle makes in a day. Some buses are serviced after 3–4 weeks while others may go for 6 weeks or 2 months. The recommended mileage is 35000Kilometers.

Regular servicing [brake lining, greasing, alignment etc.} cost around 15—20K but normal is around 10.000. ksh.

12)   I want a SACCO/Company to be managing the day to day affairs of running the 33 seater, which one would you recommend?

Come to us; pay us a visit at our office in Rongai and see what we are offering. A management company is not a Sacco, so we give you full control of your money. As for a Sacco, you have to be a member contributing and saving with the organization plus lots of paper work but, it also has its advantages for those who want to be financed after some times.

13)   What is the approximate payback time to recover my initial investment when running the 33 seater?

Two years is the longest- if you are fully dedicated. Suppose you buy a minibus worth 5.2 million and it brings home 10.000 ksh per day; you keep it on the road for 300 out of 365 days in one year; it will have made 3.6 million. That means you can recover your initial capital in less than 2 yrs.

14)   Between the 2 options above i.e. the 11/14 seater matatu and 33 seater buses, which one would you recommend as a viable business/investment?

I would advise you to buy a brand new minibus, it requires more capital but the returns are good and they have a long life span. 33 seater Minibuses will soon take over the matatu business as they are cleaner, comfortable and safer.

15)   What is your opinion between investing in the matatu industry and investing in car-hire business?

Car-hire is more of probability unless you give your car to an established tour and travel group. Most of the taxi companies gives you a fixed amount for unlimited use of the vehicle while as, you can control where a matatu goes and be assured since the income is guaranteed as long as it is on the road.

16)   In your opinion, what is the future of the Matatu industry in Kenya, especially with the upcoming railway projects within the Nairobi metropolis and the Standard Gauge Railway project?

The demand is still high and it is not going down anytime soon. The railway can only ease the demand but will not be a blow to matatu industry.

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9 Comments

Posted by on July 14, 2014 in Its life, Matatu matters

 

Tags: , , , , ,

9 responses to “Your Questions on matatu investment.

  1. markmuhati

    September 11, 2014 at 12:02 pm

    wow Mr Wambururu
    I have read through a number of your documents and i can assure you that they are a good piece of work. thanks for the time you have invested in writing this blog.

     
  2. muchiri wa njoroge

    September 19, 2014 at 1:54 pm

    You educate us alot of new things we never knew. Thankyou very much.

     
  3. Mildred

    January 12, 2015 at 9:33 pm

    We need a lot more inthigss like this!

     
  4. Arnold James

    January 16, 2015 at 9:51 pm

    Does this mean that if I import a 14 seater Nissan in September then I’ll be able to register it for long distance routes?

     
    • wambururu

      January 23, 2015 at 2:16 pm

      The first step should be to a matatu Sacco of your choice and get approval. once you get that confirmation letter you can import and get license. NOT ALL SACCO CAN REGISTER NEW VANS. THERE ARE REGULATIONS.

       
  5. Naomi

    February 19, 2015 at 10:12 am

    I am looking for a partner who we can run a Matatu in a joint venture arrangement @ 50:50. We will decide the route/coop together once we harmonize our interests and goals. 0723 443 076 or 0736 739 420

     
  6. oneal

    August 30, 2015 at 9:24 am

    i would love to buy a used hiace matatu would you help me in finding one?

     
    • wambururu

      September 8, 2015 at 8:01 am

      yeah pliz get intouch +254724384676

       
  7. Stephen

    February 11, 2016 at 3:10 pm

    Wow am more enlightened this is great

     

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