How to Start a Profitable Tuk Tuk business in Kenya, 2019

Did you know that a single tuk-tuk can give you between Ksh 2,000 – Ksh 4,000 per day? This article delves into this big business, highlighting everything surrounding the trade.

The Big Opportunity

It is said that tuk-tuks do not make losses. Let us explore why this is so, and how one can take advantage of this premise.

To begin with, the inefficiencies of matatus and buses make it very favourable for this business to thrive. Your clients will mostly be people in a hurry. People who want to cheat our daily traffic jams in town.

In bigger cities like Mombasa, Kisumu, Eldoret or Nakuru, think about people rushing to the airport to catch a flight or to receive a guest. Others are clients who have forgotten something important at home and want to rush home, pick it, and immediately travel back.

Whether engaged to a cab service or doing your tuk-tuk business independently, your earnings will depend on location, aggressiveness, and how many loyal clients you can fetch and sustain.

As a business person venturing into the tuk-tuk business, you have an option of buying tuk-tuks and then rent them out to people who pay certain amounts of money on a daily basis or you can still personally operate your tuk-tuk.

Tuk tuks vs matatus

Commuters say they are faster and can easily access narrow paths within estates, penetrating into areas that matatus cannot venture into.

Further, since they can only carry three passengers at a time, they don’t take too long waiting for fares and disembarking is also fast.

Tuk-tuk operators are always known for their kind treatment to passengers. They drop you at your exact stop, unlike matatus who though can pick you anywhere, will nonetheless insist on dropping you at designated stages, even if this is way off from your preferred stop.

Tuk tuks vs boda boda

The three-wheelers are gaining popularity in many towns across Kenya as they are perceived to be safer than boda bodas.

Tuktuks are also more commercially attractive to investors due to their higher passenger and luggage capacity and suitability in rough terrains.

So how do you get started?

How to choose a good tuk tuk

There are many models you can comfortably choose from.

However, there are a number of considerations that you must make before purchasing a new tuk-tuk. To go for petrol or diesel power is among the first considerations. Is it worth it to get one that runs on diesel?

Well, if your market mainly consists of passengers and minimal luggage, the petrol types of tuk-tuks are your best choice, since passengers prefer less noise as they travel.

If your market will require carrying a lot of luggage, the diesel variants are far much better. They have better fuel economy and deliver a greater pulling power.

Generally speaking, Diesel engines are economical, petrol ones easier to maintain.

Benefits of petrol engines

1. Petrol engines are lighter than diesel engines and easy to drive.

2. The power output of petrol engines greater than the diesel engine.

3. Petrol engines have a lower maintenance cost.

4. They don’t produce much noise.

5. Low on emissions hence eco-friendly.

6. Petrol engines tend to weigh less than the diesel engines.

Benefits of diesel engines

Diesel engines are able to produce high pulling power at low speeds and so are good for overtaking and for towing. If you are planning to overload your tuk-tuk, get a diesel engine.

Diesel engines will get you an average of 15-20% more mileage on fuel than their petrol equivalents. The main point is this: diesel engines typically deliver better fuel economy compared to petrol engines. A litre of diesel goes for about  36kms compared to the petrol tuk-tuks that can run 32 kilometres with a litre of petrol.

We need to separate two things here: running a tuk-tuk and maintaining the tuk-tuk. Running the tuk-tuk is basically operating it and feeding it consumables, which can best be summarised as “fuel”, and in this regard diesel power is superior.

Diesel engines burn a lot less fuel per kilometre travelled compared to petrol ones, in some cases as little as half or even less. To this add the benefit of diesel being almost 10 per cent cheaper per litre compared to petrol in our market.

Maintenance is a totally different issue and it swings the pendulum the other way. Diesel engines are complex and made from heavier materials, so they cost more to produce. This, in turn, means that their spare parts cost comparatively more.

You will be servicing a diesel engine a lot more frequently than you would a petrol equivalent.  Maintaining a diesel engine is a hill you must be prepared to climb.

Tuk-tuk prices in Kenya

You can get a new tuk-tuk with as low as about Kh 320, 000. These are brand new three-wheelers that will assure you of good mileage. Second-hand three-wheelers are also available on OLX  or Nduthi.com for as little as Ksh 130,000 to Ksh 150,000.

Piaggio has more popular and preferred models in Kenya, with their partnership with Car and General Motors giving them an even higher score. The Company is the appointed dealer for Suzuki and TVS motorcycles in East Africa.

In 2017, the company launched a new three-wheeler model named Ape Romanza in the coastal city of Mombasa that targets tourists. The model is also available and convenient for business in any part of the country.

Ape Romanza Tuk Tuk
The new Piaggio Tuk-tuk, Ape Romanza

The new 2017 model features a drop-top hood with colour and co-ordinated half doors. It is a four-stroke 200cc petrol engine with average fuel consumption of 30km per litre.

It comes in White, Blue or Red colours. Its capacity remains the Driver plus 2 rear passengers. Ape Romanza is convertible and one can open its canvas to get fresh air and cool breeze when it is sunny and close it. It comes with a two-year warranty.

Ape Romanza costs between Ksh 380,000 – Sh430, 000 and uses petrol. Have a look at the following Piaggio variants:

Piaggio Pick Up

piaggio pickup red

Piaggio City Diesel

Piaggio City Diesel tuk tuk

Piaggio Delivery Van

Piaggio delivery van

Tuk Tuk Loans in Kenya

To get started, you can take advantage of the KCB Tuk Tuk Loan, a product designed for entrepreneurs who would like to venture into this profitable business so as to improve their economic welfare.

KCB facilitates up to 90% of the purchase price and comprehensive insurance covers.

KCB Tuk-tuk loan Benefits

Loans of up to 90% of the purchase price (With an upper limit of Ksh. 5 million-plus insurance) with a repayment period of up to 24 months

Special price offers from dealers

Motor service available at dealers

Comprehensive Insurance per annum of Kshs 9,600.00 for Boda Bodas and Kshs 15,000.00 for Tuk Tuks

Qualifying Criteria

An active account with any business institution where business proceeds are remitted for at least 3 months

Capability to service required monthly instalments

Proforma invoice from the Tuk Tuk dealer

A valid driving license of the rider/driver

Funds are disbursed directly to the dealers’ accounts

Rates and Fees

Interest rate 14%, and a  loan negotiation fee charged upfront at 3% of the loan amount

Next, we explore the tuk-tuk business in each of the big cities in Kenya.

Mombasa

Tuk-tuks have become so popular in Kenyan towns, something that pushed US-based taxi service company Uber to launch uberPOA in Mombasa two years ago.

tuk tuks mombasa

There are more than 15,000 tuk-tuks operating in Mombasa. The three-wheeled vehicles are popular in Mombasa as they are cheaper and can easily manoeuvre around the island.

UberPOA is aimed at providing the residents of Mombasa a safe, reliable and affordable option to move from one place to another on a tuk-tuk using Uber’s technology.

“Tuk tuks are now very popular across many cities in Kenya, and we are determined to launch localised products that resonate with the demands of local citizens,” says Mr Loic Amado, Uber East Africa general manager.

UberPOA is priced with a base fare of Ksh 10 – Ksh 15 per km, Ksh 3 per min and a minimum fare of Ksh 50. Riders are therefore able to travel to popular routes such as Posta to Nyali for Ksh 170, Posta to Bamburi for Ksh 280, Likoni ferry to Tudor from Ksh 270, Kongowela to City Mall from Ksh130 and Bamburi to Pirates from Ksh 50.

Other popular tuk-tuk services in Mombasa include Mondo Ride, Taxify and Jingorides, all using online taxi apps to connect with their clients.

Kisumu

Tuk-tuks are taking over public transport in the lakeside city of Kisumu, leaving matatus choking in a competitive race for passengers. Kisumu already has an estimated 4,000 Tuk Tuk operators.

Passengers to the various neighbourhoods in the city now prefer using these three-wheeled ‘chuggers’ and not matatus. Their influx is evident all over the city, taking control of streets near major malls, as well as the main routes in Kisumu.

tuk tuk kisumu

Tuk-tuk operators in Kisumu already formed an association to self-regulate their operations, inorder to ensure they take over public transport in the lakeside city. According to a member of the association, registrations are ongoing to bring the hundreds of tuk-tuk operators in Kisumu County under one umbrella.

Challenges in business are inevitable. With the booming business comes vested interests and turf wars amongst the operators over control of certain routes. The market in Kisumu is however liberalised, leading to stiff competition in the sector.

In fact, estates like Dunga, Nyalenda, Milimani, Makasembo, Ondiek, Polyview and Arina residents have accepted the change and now live without matatus.

kisumu international airport

Just two months ago, Estonian taxi-hailing firm Bolt (formerly taxify) unveiled its services in three additional towns across Kenya stepping up competition for its rivals Uber and Little Cab, who already have a presence in these regions.

Bolt launched its service in Kisumu, Thika and Kakamega adding to Nairobi and Mombasa cities which it entered in 2016 and 2017, respectively. The firm unveiled taxi, tuk-tuk and bodaboda services in these new towns.

Nairobi

Tuk tuk transport is gaining foot in most estates within Nairobi, making it the third most popular means of transport after matatus and boda bodas.

And this is facilitated by for two simple reasons; affordability and convenience.

nairobi tuk tuk business githurai 45

Tuk-tuks in a queue for passengers at Githurai 45 bus terminus  PHOTO | COURTESY

The convenience of not sharing your space with other passengers while commuting using three-wheeler counts to many.

Nakuru

For a long time, matatus have enjoyed the public transport monopoly within Nakuru town.

The 14 seater matatus used to be the main mode of public transport for commuters residing and working within Nakuru town and its environs, giving the operators the power to regulate fares at will.

But currently, the situation is completely different due to the introduction of tuk-tuks that offer alternative transport services.

The three-wheeled motor vehicles with a capacity of four passengers have taken over the industry by storm.

tuk-tuk business nakuru

Tuk-tuks along Kenyatta Avenue in Nakuru town on April 24, 2019. PHOTO | COURTESY

It is an invasion that caught the matatu operators unawares and is now giving them stiff competition.

For matatu operators, this invasion has greatly disrupted the initially lucrative transport business in the multi-billion shillings sector.

The rivalry has been perpetrated by the emerging shift by commuters who now prefer to use tuk-tuks, citing that they cheaper and faster compared to matatus which usually takes longer to fill up. It has also become difficult for matatus to hike fares when fuel prices go up due to the alternative cheaper modes of transport.

Here is a quick recap:

Tuk-tuks mainly thrive due to the inefficiencies of matatus and buses. You need to be careful with your clients. They are mostly people in a hurry, maybe rushing to pick someone.

They are becoming more popular in many towns across Kenya. Many clients see them as a safer option compared to boda bodas.

Diesel tuk-tuks are suitable in carrying heavier loads. Petrol tuk-tuks are cheaper to maintain and less noisy.

A brand new tuk-tuk will go for about Ksh 300,000 to Ksh 450,000. Second-hand three-wheelers are also available on OLX  or Nduthi.com for as little as Ksh 130,000 to Ksh 150,000.

KCB bank offers Tuk-tuk Loans of up to 90% of the purchase price (With an upper limit of Ksh. 5 million, plus insurance) with a repayment period of up to 24 months

Tuk-tuks cannot be wished away. Take advantage of this great opportunity. With this important knowledge, I believe you would be good to get started.

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