LAST MINUTE

Importers rush to beat deadline on used car

There are 10 days remaining for December 2015 units

In Summary

•There are at least seven vessels booked between today and January and January 2, Kenya Ports Authority schedule shows, meaning some units might not make it on time.

•The current global vessel shortage remains a concern for importers which are afraid there could be a repeat of last year, where more than 30,000 second-hand cars arrived late.

Imported used cars parked at a yard in Mombasa/
Imported used cars parked at a yard in Mombasa/
Image: JOHN CHESOLI

Car importers are rushing to beat the eight-year rule on used vehicles being imported into Kenya, 10 days to the deadline.

The Port of Mombasa has in the past three weeks recorded a high number of motor vehicle carrying -vessels mainly from Japan as importers are determined to have their units cleared before December 31.

Apart from occasioning loss to dealers and individual car importers,  KRA stands to lose up to Sh30 billion in excise duty.

On average, KRA collects Sh250,000 or higher, per unit of a second-hand car that lands at the Port of Mombasa.

The Car Importers Association of Kenya (CIAK) is however confident the most of the 2015 units will arrive in the country before the December 31, deadline.

“Our members are aware of the repercussions so whenever this time approaches, people do make orders early enough to avoid any inconveniences, “National Chairman Peter Otieno told the Star.

More than 80 per cent of the cars on Kenyan roads are used cars from Japan that are sold at cheaper price averaging Sh300,000. Annual imports stand at around 90,000 units.

Taxation and shipping of these units however pushes the price to an average of Sh800,000 for low capacity small units and up to Sh2 million and above for bigger engines.

Majority average slightly above Sh1 million compared to the price of locally assembled vehicles, where the minimum price is about Sh1.5 million.

This has made Kenyans prefer importing used vehicles from Japan, United Kingdom, United Arab Emirates, Singapore and South Africa.

There is however a push by the East African Community (EAC) to cut the age limit for imported cars into the region to five years, to promote local assembling of vehicles. It is also aimed at cutting carbon emissions

This will make it more expensive to buy a used imported car.

Tanzania has in the past had no restriction but recently placed an eight-year age limit. Rwanda, Burundi and South Sudan do not have limits.

On average, cars in the region are between 15 and 20 years old with the used cars highly popular with majority of middle-income Kenyans, with car loans common in financial institutions and car dealers.

A car that fails to beat the eight-year rule, for Kenya, is either destroyed or shipped back at the importers’ expenses.

On average, Kenya importers between 7,000 and 8,000 units month but this can go higher especially December when the units have a cheaper buying price in the import source markets.