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CAR PRICES

Used car dealers protest new mark-ups for units

Recommended retail selling prices up by up to 40%

In Summary

•For instance, the CRSP value of a Honda Fit is pegged at Sh3.7 million which is higher than a Mercedes Benz B Class with a CRSP of Sh3.1 million.

•The Car Importers Association of Kenya (CIAK) yesterday said KRA should first consult sector players before formulating new retail selling prices.

Imported vehicles parked at a yard in Mombasa/ Image./FILE
Imported vehicles parked at a yard in Mombasa/ Image./FILE

Importers and dealers of used cars have rejected retail pricing proposals by the Kenya Revenue Authority (KRA), terming them exorbitant and aimed at pushing them out of business.

In a notice on April 29, KRA called for public participation on ‘Current Draft Retail Selling Prices (CRSP) April 2020’, which will set the retail prices for units across the market.

In accordance with a recent court ruling and Article 47 of the Constitution, the Commissioner is required to conduct public participation on the CRSP April 2020 before the implementation of a new CRSP database.

 

“The public is encouraged to review and send their submissions and feedback by May 26 (yesterday),” Commissioner for customs and border control said in the notice.

At least 80 dealers, with showrooms mainly in Mombasa and Nairobi, have objected to the move saying the latest CRSP will push up the cost of used cars by up to 40 per cent, putting some used cars at higher selling prices than new vehicles.

The Car Importers Association of Kenya (CIAK) yesterday said KRA should first consult sector players before formulating new retail selling prices.

According to the CIAK, the draft CRSP  favours franchised (local motor vehicle dealers) as opposed to the used motor vehicle dealers. 

Some of the CRSP values are a replica of the values, which the franchise is using, CIAK national chairman Peter Otieno said.

The CRSP value of a Honda Fit is pegged at Sh3.7 million which is higher than a Mercedes Benz B Class with a CRSP of Sh3.1 million.

“It is clear some of the CRSP values lack simple logic. The value of a luxurious vehicle cannot be more than a standard salon vehicle to say the least,” Otieno said.

 

A draft of new prices, seen by the Star, reflect average price increases of between four and 36 per cent on different car models.

A Ford Mondeo(hatchback)–2200cc engine capacity, diesel engine, has its CRSP pegged at Sh5.3 million, up from Sh3.7 million. This reflects a Sh1.57 million increase on duty payable.

Toyota Allion and Premio (1790cc) saloon cars have a CRSP of Sh4.5 million. The units (used) have been trading as low as Sh2 million in the local market.

“Some of the values are unreasonable, copy-pasted from dealers’ inflated values meant to remove the used car dealers from the market,” Otieno said.

Among the 80 dealers in the protest include Osaka Motors Kenya Limited, Alibaba Motors, Punjab Trading, Bell Motors, Maheer Motors and Auto Japan Limited.

CIAK also wants CRSP values for motor vehicles based on the year of manufacture and not the year of importation.

According to the dealers, a motor vehicle manufactured in 2013 should have a constant CRSP so that if it is imported years later, it should not cost the same with a most recent model of the same make.

They also want exchange rates considered in the car retail prices, where recently, the shilling has been vulnerable to the dollar.

An attempt to set new CRSP backfired when the High Court ruled in favour of car dealers in October 2019. They had moved to court in June 2018 to protest the move.

The court observed that the interests of motor vehicle dealers should be given first priority in matters of CRSP as they are the subjects of the values contained therein.

Second-hand cars account for 85 per cent of all vehicles sold in the country annually where about 130,000 units are imported, with an estimated Sh60 billion spent on these units.

The sales of these vehicles have remained low in recent times, blamed on low disposable income.

“There is a liquidity problem. We have witnessed low sales,” Kenya Auto Bazaar Association chairman John Kipchumba told the Star.

The country imports up to 12,000 used units a month on a peak, mainly from Japan, United Arab Emirates, United Kingdom, Singapore and South Africa.