Kenyan vehicle importers demand tax reduction

Kenyan vehicle importers demand tax reduction

Kenya is a major importer of new and used cars from countries worldwide and imports over 90,000 cars every year. Since people who will use car will sell it at a lower price, most of the car buyers in Kenya prefer to purchase second hand cars. Only ten percent of the cars in Kenya are new cars. However many of the car exporters are concerned about the new rule of the Kenyan government, which restricts the the imports of cars in Kenya. According to the new rules which will come into force from July 2019, the age limit for the cars which are imported has been reduced from eight years to five years for cars with engine capacity of more than 1500 cc .

The cabinet secretary for trade and industry in Kenya, Peter Munya has confirmed that the government will not withdraw the rule on changing the age limit for imports. The Kenyan Bureau of Standards (KeBS) which will release the legal standards implementing these changes has not provided any information to the car exporters from Japan and other countries who are likely to be affected by the rule change. The KeBS will provide the draft legal documents specifying the age limits for the imported cars, and also the emission standards which the imported vehicle should comply with.

If this rule is implemented, the prices of the imported cars are likely to increase significantly which will adversely affect the business of the car importers. Hence many of the car dealers are planning to lobby with Kenyan government, to reduce the tax and other duties on the imported cars. Like in most countries, Kenya imposes a substantial amount as import duty on vehicles, and if the age limit for the cars is reduced, the cost of the imported vehicles will be much higher. This could adversely affect the sales of the vehicles in Kenya.

Be Forward is one of the largest Japanese exporters of used cars to Kenya and has a large number of outlets in Kenya, opening three more outlets in Ruiru, Kiambu and Mombasa recently named AZ motors, Urban Drive and Auto biz respectively. The marketing development manager of the company, Mr Kei Tsuchiya said that the company was focusing on providing good value to their customers, so that they would get a good resale price if they wished to sell their existing car, to upgrade their car or other reasons. John Mutahi, the forward sales manager of Be Forward said that the car dealers should lobby to get the price of the cars reduced.

Mutahi was quoted as saying that instead of focusing on the age of the vehicle, the government should look at the quality and pricing of the car. This is because some of the newer cars may be used extensively and are not in good working condition. This legislation of the Kenyan government is likely to increase the imports of new cars in Kenya. Realising that there is a large demand for cars in the country, a number of car manufacturers from different countries like Volvo from Sweden, Volkswagen from Germany and Peugeot from France have already set up units for assembling cars in Kenya.

*Required Information

Product Enquiry