Second-hand vehicle dealers are confident of beating the eight-year rule deadline for the ninth straight year, despite a sharp increase on orders triggered by the recent new valuation rule.
Monthly average imports have increased by more than 40 per cent since October, when Kenya Revenue Authority moved to harmonise the valuation parameters of used motor vehicles.
The taxman shifted to a bloc year on taxation of second-hand cars, meaning units that arrive even as late as December are paying the same taxes as those imported in January, same year.
This was from a previous first month of registration, which made late imports during the year cheaper compared to those brought in at the start of the year mainly on taxations.
According to Kenya Ports Authority, the port of Mombasa is expected to receive record 48 cargo vessels in 14 days, as the festive season peaks.
Of this, six are car carriers bringing in a record 5,438 units in a period of two weeks.
This is nearly the monthly average imports of between 5,000 and 7,000 that have traditionally been imported in the first half of the year, before numbers rising to above 10,000 as the year ends.
The rise on imports has also been attributed to increased offloading of used vehicles in key import markets in the wake of availability of new units, as global automakers increase output on easing of a semi-conductor chip shortage which has affected the industry in the past three years.
For instance, in Japan, which accounts for up to 80 per cent of second-hand car imports for the Kenyan market, new vehicle market expanded by almost 11 per cent to 437,493 units in September 2023, compared to 395,163 units a year earlier.
There is also the aspect of vessels availability as carriers which since the reopening of the economies in post-Covid pandemic era, majority concentrated on high demand lucrative routes between Asia, Europe and the US.
Speaking to the Star yesterday, Car Importers Association of Kenya (CIAK) national chairman Peter Otieno said early orders have helped importers beat the December 31, deadline for the past eight years.
“We are not under any pressure. Our members are aware of the deadline so by October into November, last minute orders are already made to ensure units are in the Kenyan waters on time before end of December,” Otieno told the Star in an interview.
The association has also agreed with the Kenya National Bureau of Standards (Kebs) on allowing vehicles that are purchased, inspected and cleared for importation before December 5, to be allowed into the country even if they arrive past the deadline.
“You see this are vehicles that are already destined for Kenya so the challenge might be on vessel availability..so we have agreed with Kebs that so long as the vehicles have been cleared for shipment on time, but end up arriving late, there should not be a problem,” Otieno said.
Last week, Kebs issued the traditional notice on the eight-year rule, which locks out 2016 units from January 1, meaning they should arrive in the country latest by mid-night December 31.
“Only motor vehicles whose year of first registration is from January 1, 2017 and later shall be allowed into the country effective January 1, 2024,” Kebs said.
The last time importers were hit by losses on late imports was in 2014, when more than 2,000 used motor vehicles registered in 2006 were locked out of the country.
Since then, importers have been rushing to beat the deadline with no major lockout reported, save for 2020 when the pandemic struck.
During the year, more than 18,000 units manufactured in 2013 arrived late as the Covid-19 pandemic disrupted the shipping industry.
The government allowed units whose delays were solely as a result of shipping.
Apart from Japan, Kenya also imports used vehicles from United Arab Emirates, United Kingdom, Thailand, Singapore and South Africa, markets which Kebs has contracted Quality Inspection Services Inc. Japan (QISJ) to offer inspection services.
Meanwhile, car prices remain high on the weak shilling to the US dollar, and revised taxes, among them the EAC depreciation schedule, which has now capped the maximum depreciation rate at 65 per cent, from a previous 70 per cent, increasing taxes by at least 15 per cent.
Dealers and importers of both second-hand cars and knocked-down units imported by local assemblers (new cars) have also been hit by a 35 percent import duty.
This was after the East African Community approved an application by Kenya to raise duty on motor vehicles under the Common External Tariff (CET), from a previous 25 per cent.