The age limit for imported second-hand cars is set to drop from eight to five years starting July, setting the stage for a steep increase in prices and taxes payable on the units.
Trade secretary Peter Munya has directed the Kenya Bureau of Standards (Kebs) to draft legal amendments lowering the age limit and raising allowable exhaust emission standards for all vehicle imports.
The new regulations, which Mr Munya has directed Kebs to draft by tomorrow, January 15, will pave the way for gazettement and official enforcement of the changes after Treasury secretary Henry Rotich’s Budget presentation in June.
Implementation of the order will immediately raise the price of almost all second hand vehicle imports to above Sh1 million, with the cost increase ranging from hundreds of thousands to millions of shillings depending on the model.
Second hand car imports are highly popular with majority of Kenyans owing to their affordability compared to locally assembled units or new imports.
“Be advised that government has already committed itself to developing a National Automotive Policy Framework and at the same time, review the emission levels and age limit on imported used motor vehicles from the current eight (8) years to five (5) years effective July 2019,” Mr Munya wrote in a December 20, 2018 letter to Kebs.
A vehicle manufactured in 2012 is the oldest that can be imported into the country this year based on the current eight-year age limit but the change to five years means the year of manufacture will be from 2015.
Newer vehicles cost more to buy from overseas markets such as Japan, with the units also attracting higher taxes since the custom value forms the basis for a series of cumulative levies.
A 4.6-litre petrol Toyota Land Cruiser VX manufactured in 2012 is currently retailing at Sh7 million while a similar 2015 model will be priced at about Sh11 million, inclusive of dealers margins.
A non-hybrid, 2.4-litre petrol Toyota Harrier made in 2012 is being sold for Sh2.8 million while a similar 2015 unit is expected to retail at Sh4.3 million.
A one-litre petrol-powered Toyota Vitz manufactured in 2012 is going for Sh612,000 while the same model produced in 2015 is estimated will cost Sh1 million.
“Prices will rise even higher if the proposed age limit is implemented because newer models are fewer and sellers in Japan and other markets will respond to increased demand by raising prices,” said the secretary-general of Kenya Auto Bazaar Association, Mr Charles Munyori.
Mr Munya said the changes are intended to boost local motor vehicle assembly, terming it a priority sector under the government’s Big Four agenda and also at the East African Community (EAC) level.
Volskwagen and Peugeot are the latest automakers to begin limited assembly of their cars in Kenya, with new vehicle dealers having lobbied the government for years to curb importation of used vehicles.
Used vehicle dealers complained that the move would punish the majority of buyers and second-hand car dealers and benefit only a few new vehicle assemblers and dealers. “Government policies should be about promoting the interests of the public. In this case, a few assemblers are to be protected by raising the cost of vehicles for most Kenyans,” argued Mr Munyori.
He added that the July implementation target is also not feasible because the process of changing the motor vehicle standards needs public participation ‘which can take up to one year.’
One of the bodies that needs to be involved in making the changes is a technical committee whose membership includes the transport ministry, Kebs, insurers and motor vehicle dealers.
“The current push by the cabinet secretary (Mr Munya) may not work unless he intends to bypass the technical committee, thus exposing the government to legal challenges,” said Mr Munyori.
Official data shows that Kenya imports an average of 7,600 vehicles per month, with the average assembled units standing at about 430.
Assemblers mostly produce commercial vehicles such as buses and pick-ups, with their range of passenger cars severely limited.