SURGE

Kenyans import more vehicles in 2021 as registrations jump 14%

New units registered increased to 107,499 from 94,128 units in 2020.

In Summary

•Majority of these are imported second-hand vehicles.

•The government is however keen to have more units produced locally with plans to ban import of buses and trucks starting July. 

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

The number of newly registered motor vehicles recorded an increase of 14.2 per cent last year compared to the previous year, as Kenyans imported more second-hand units.

The year also saw the number of new units sold by local assemblers and dealers increased, recovering from a slowdown in 2020 when the pandemic hit industries hard.

Data by the Kenya National Bureau of Statistics (KNBS) indicates registration (new number plates) increased to 107,499 units from 94,128 units in 2020, majority being imported used cars.

Total number of motor vehicles landed at the Port of Mombasa, the main entry point for units, rose by 24.9 per cent from 101,220 units in 2020 to 126,415 units in 2021, as Kenyans defied the tough economic times to spend more on cars.

New motor vehicle sales also rebounded and had increased 30.2 per cent to 12,750 units as of November last year, up from 9,792 units a year earlier.Station wagons accounted for the bulk of newly registered vehicles and rose from 57,962 registered units in 2020 to 64,350 units in 2021.

Similarly, there was an increase in registration of saloon cars (5.4 %), to 8,170 from 7,754 units the previous year.

Lorries or trucks and trailers registered increased to 7,071 and 3,187, from 6,476 and 2,382 units, respectively.

“Vans and pick-ups registered however dropped to 5,986 units from 6,065 units,” KNBS says in its latest Economic survey.

New registration of mini-buses and matatus also declined from 1,084 units in 2020 to 822 units in 2021, signaling reduced investment in the matatu industry.

This reflects the Matatu Owners Association chairman Simon Kimutai’s sentiments last year when he said the losses in the industry which had been occasioned by the pandemic had stalled investments in the sector.

At the height of the pandemic, the Passenger Service Vehicles (PSVs) were restricted to half carrying capacity which lowered their earnings.

“Matatu owners are not meeting the cost of operations, many will be forced to ground their vehicles,” Kimutai ha said during an interview with the Star.

There was a 12.6 per cent drop in the number of PSV licenses issued to matatus from 36,323 in 2020 to 31,737 in 2021.

The number of individual driving licenses issued however rose by 26.9 per cent to 384,899 during the period under review, which is in tandem with the high number of vehicle registration and renewals.

Last year, the unit price of imported road motor vehicles rose by 11.6 per cent from an average of Sh858,435 in 2020.

The average cost of rubber tyres and tubes rose by 15.9 per cent over the same period.

The unit price of imported road motor vehicles rose by 11.6 per cent in 2021 from an average of Sh858,435 in 2020.

Imported second-hand cars dominate the local market accounting for 85 per cent of Kenya's car purchases.

About 80 per cent of imports are from Japan with other markets being United Kingdom, United Arab Emirates, Singapore and South Africa.

The government has been keen to revitalise local assembling and sale of new vehicles in a move aimed at creating jobs and growing the sector. Major players in the country includes Isuzu, Mombasa’s Associated Vehicle Assemblers (owned by Simba Corp), Thika’s Kenya Vehicle Manufacturers (owned by the government), DT Dobie and CMC Holdings.

Effective July 1, Kenya plans to ban importation of used buses, mini-buses and trucks giving a opportunity for local industry to supply the market.

National Treasury CS Ukur Yatani in the 2022-23 budget proposed a number of incentives to support local production among them exemption from VAT inputs and raw materials used in the manufacture of passenger motor vehicles.

Additionally, he proposed to exempt locally manufactured passenger motor vehicles from VAT.

Currently, locally assembled motor vehicles are exempt from excise duty.

“In order to ensure the same treatment for manufactured passenger motor vehicles, I propose to exempt from excise duty locally manufactured passenger motor vehicles. This is aimed at encouraging investment in this sector and enhancing competitiveness of locally manufactured passenger motor vehicles,” Yatani said.

Isuzu East Africa is among firms that are keen to tap the opportunity, where the country has an installed capacity of producing up to 30,000 such vehicles annually.

The industry is however churning about 7,000 vehicles with the remaining demand being met by imports.

The company which is big in the commercial space, with a share about 45 per cent, has the capacity to produce 11,000 vehicles on a single shift, according CEO Rita Kavashe who has welcomed the move by the government.

“We see this as a good opportunity to strengthen our plant. We have already invested about Sh1 billion in our paint shop, and vehicle testing equipment among other areas, in terms of readiness…. we are ready to take up this opportunity,” Kavashe told the Star.

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