Japan used car imports defy political roar to surge

Tuesday December 19 2017

The number of vehicles brought in between January and October is up 35 per cent compared to the same period last year. FILE PHOTO | NMG

The number of vehicles brought in between January and October is up 35 per cent compared to the same period last year. FILE PHOTO | NMG 

By BRIAN NGUGI
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The political uncertainty that characterised this year’s General Election failed to apply brakes on used car imports from Japan.

The number of vehicles brought in between January and October is up 35 per cent compared to the same period last year.

Nairobi booked a total of 61,488 second hand vehicles from Tokyo in the 10 months to October compared to 45,540 units a year earlier according to fresh statistics from the Japan Used Motor Vehicle Exporters Association (Jumvea).

The industry is thus on course to surpass the 57,130 total shipments in full year of 2016.

The latest data from Jumvea, the Japanese used car dealers lobby, which collates data on all vehicle exports from the giant Asian economy to all destinations around the world, also shows imports have outnumbered previous performances around the election period.

Nairobi imported 51,130 second hand vehicles from Japan in 2016, 77,457 in 2015, 67,059 in 2014 and 61,396 in 2013. A total of 44,659 units were imported in 2012, 39,248 (2011), 50,749 units (2010), 44,699 units (2009) and 40,546 units in 2008.

 “The performance is better than what we would have expected,” Stella Koech, Kenya country manager for JPC Trade, a Tokyo-based used car dealer, told Smart Company in an interview.

“The elections did not have an impact on the purchases as the figures show.”

The economy takes a dip every five years as businesses hold back investments awaiting elections outcome.

The violence witnessed following the disputed 2007/08 presidential election results has caused uncertainty in successive polls in 2013 and 2017.

Kenya is Africa’s biggest importer of used Japanese vehicles and is ranked fourth largest market globally for Tokyo’s lucrative industry, according to data from Jumvea.

Kenya’s car market is dominated by low-priced used imports from countries such as Japan.

According to the Kenya National Bureau of Statistics (KNBS) in the full year of 2016 Kenyans cut spending on imported vehicles by Sh31.7 billion to Sh85.5 billion from Sh117.6 billion in 2015, reflecting a 27 per cent drop.

Motor dealers attributed the cutback to reduced demand due to tax measures introduced in December 2015.

President Uhuru Kenyatta in November 2015 assented to the Excise Duty Act (2015), which set the levy at Sh200,000 for imported vehicles more than three years old and Sh150,000 for newer ones — a departure from the previous duty of 20 per cent on a vehicle’s value.

The Treasury, however, later in June last year abandoned the flat rate duty of Sh200,000 for vehicles older than three years and Sh150,000 for newer ones introduced in December, in favour of the previous 20 per cent levy of the car’s worth. The damage had, however, already been done.

The new law took effect on December 1, 2015 when used vehicle imports from Japan to Kenya dropped to 1,962 units compared to 7,591 in November as dealers rushed to escape the new taxes.

The new excise tax regime had the effect of doubling the duty for saloon cars and in contrast lowered by half the tax payable on luxury models and commercial vehicles such as buses and trucks.

Motor dealers attributed the cutback to reduced demand for vehicles due to tax measures introduced in December 2015 that made cars below Sh1 million more expensive. The majority of Kenyans import used cars of below Sh1 million