The number of used cars imported into the country has hit a record 5,000 in a span of two weeks, pegged on availability of vessels and units.
This is after shortage of ships into the African market which started last year, spilling into this year, as trade between Asia, the US and Europe increased on reopening of economies.
Shipping lines were said to focus on the high end markets, deploying smaller vessels to regions such as the East Africa.
Mombasa port currently receives between 11 and 20 large vessels per week, Kenya Ports Authority notes, with the numbers expected to grow.
"Improved capacity has seen the vessel turnaround reduce to less than six hours from up to three days, KPA principal communication officer Hajj Masemo told the Star.
There were at least nine car-carrying ships expected at the Port of Mombasa between yesterday and April 19, a span of two weeks, bringing in about 5,103 units.
Traditionally, the country imports between 3,000 and 4,000 units per month in the first half of the year, with numbers increasing in the second half as importers rush to beat the eight-year rule.
“There were a number of units that had been bought earlier but could not be shipped due to a shortage of vessels,” Car Importers Association of Kenya (CIAK) national chairman Peter Otieno told the Star.
The Shippers Council of Eastern Africa (SCEA) yesterday said part of the vessel shortage was as a result of delays in voyages occasioned by the Russia-Ukraine war that has affected global trade.
The recent global shortage of semi-conductors which affected car manufacturing has also eased, industry players note, leading to more production hence availability of used cars.
Russia and Ukraine are key exporters of raw materials used in the manufacturing of various microchips.
This includes palladium heavily used in making memory and sensor chips, where Russia accounts for 45 per cent of the global supply.
"The supply chain is slowly opening up ," SCEA chief executive Gilbert Langat said.
Car prices in the local market are however expected to remain high in the medium term as car owners in the import market sources take longer to replace units.
This is as a result of the low production and inflationary pressure that has reduced spending power for households.
Shipping costs have also gone up from as low as $2,600 ( about Sh299,572) for a 40-foot container to $10,000 (Sh1.2 million) at the height of the pandemic, for those importing units as containerised cargo.
A 40-foot can take up to four small units.
Car prices have shot up by up to 45 per cent in the Kenyan market, a trend expected to be witnessed for at least the next year.
For instance, a Mazda Demio which used to go for about Sh550,000 is now between Sh750,000-Sh800,000.
Toyota Probox has hit Sh1 million from as low as Sh550,000-Sh650,000.
A seven-year-old Prado which used to go for between Sh4.3 and Sh4.5 million is now selling at about Sh5.5 million.
“The prices are expected to remain high until the supply chain and market stabilises ” said Steve Otieno, director at Ziara SEZ, Nairobi, which handles imported cars.
Kenya imports 80 per cent of its used cars from Japan with other markets being the UK, United Arab Emirates, Singapore and South Africa.
They dominate the local market accounting for 85 per cent of Kenya's car purchases, with an annual import of up to 90,000 units.
The shortage had resulted to Kenyans going for third generation cars traded locally. These are used cars being sold by local owners.
“Demand has been high because prices of second generation vehicles have gone up. People are going for local units which are being sold by third, fourth owner,” Kenya Auto Bazaar Association (KABA) chairman John Kipchumba said.
The high demand has also pushed up prices of these units.
For instance, a locally used Toyota Probox is currently going for about Sh700,000 from a low of Sh400,000.
The Jamhuri Show Ground based bazaar attracts about 2,000 second-hand cars and 3,000 customers every Sunday.
Another substitute for imports is the refurbishing of old and abandoned cars by local mechanics and workshops, KABA notes, a trend expected to be witnessed in the medium term as buyers watch the prices of imported units.
Meanwhile, Kenyans are navigating the tax module in place under the eight year rule , as importers and dealers continue to push for a harmonised system by the Kenya Revenue Authority(KRA) and the Kenya Bureau of Standards (Kebs).
KRA recognises units on the month of registration while Kebs uses a bloc year of January-December.
However as the year approaches the end, KRA switches back to the bloc year locking out units that have not reached 12 months since the first date of registration.
This forces importers to go for newer cars at higher taxes, a move importers say is creating confusion in the market.
For instance a car first registered in March this year would ideally be acceptable for import until March 2023 if it is recognised on the first month of registration.
On taxation, a unit that was first registered in April this year will be taxed as a 2015 car.
Those first registered in May to December will pay taxes of 2016, which is a year short of the maximum eight years allowed for second-hand cars.
“There is a lot of confusion and that is why we have always called for a harmonised system,” CIAK's Otieno said.
Several efforts to have the harmonisation in place, which would also simplify taxation, have hit the wall with the recent being a court ruling that was in favour of the government.
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