Lowering age limit of used cars is counterproductive

The author stands next to a 1914 Ford T Model owned by Michael Hughes at Karen in Nairobi. Automotive technology has come a long way. [XN Iraki, Standard]

The Draft National Automotive Policy of January 2019 states that the age limit on imported passenger cars is moved from the current eight years to five years by 2019 for vehicle engine capacity of 1600 cubic capacity (cc) and then to three years by 2021.

This is expected to help in expanding the market for locally assembled vehicles. What of those less than 1600 cc? Key objectives of the policy include supporting the growth of the automotive industry, increasing exports, employment generation and skill development and giving a supportive environment for research and development efforts in the automotive sector.

The contentious issue lies in the policy is a reduction in the age of imported cars to five years from the current eight.

The policy in spirit attempts to modernise Kenya. New cars are often a sign of modernism.

That is why there are more new cars in Nairobi than in rural areas where old cars eventually find their home.

I found more old cars in Mississippi than in California and New York which are richer. In the category of old cars, we exclude vintage cars, popular at the Concur d ‘elegance. The other reason could be safety. On average, newer cars are safer. But the newness of the car is more about usage than age.

Just like human beings, those who have worked or struggled in their lives often age faster.

A car manufactured five years ago could have covered more distance than a 10-years-old car depending on the use. Genuine mileage, not age should be the limit for car importation. Mileage is better a predictor of a car’s roadworthiness than its age.

Older cars pollute more, leading to environmental and health concerns. If the vehicle's exhaust was plain water there would be no such concern. We urgently need cars that burn hydrogen to produce water.

Pollution includes disposal of old cars and their components like batteries. Is it true that old used cars are exported to Africa partly to “clean“ exporting countries? The need to protect local industries is driving the new policy. Yet we currently assemble not manufacture cars in Kenya?

By raising the age limit, imported cars will become expensive and that could nudge Kenyans to buy new local cars.

Currently, assemblers utilise only 30 per cent of their capacity while component makers 36 per cent, says the draft policy.

Increasing this capacity, the draft envisages the creation of 150,000 jobs and saving lots of foreign exchange. This brings us to economics. Is raising the age limit of imported cars not giving local assemblers unfair advantage? Is this not protectionism in disguise? The ultimate decision-maker on the age of the car should be the buyer. In fact, if we decreed there is no age limit for the imported cars, you will be surprised that the market will set a limit! How? Customers will find that the old car is cheap but troublesome. They will start demanding newer cars until they find that cars beyond a certain age or mileage are bad.

If the decision to limit imported cars age to five years is carried through, there will losers and gainers. The first loser will be the government from duty paid on imported cars, about a third or more of the price.

The high price for newer cars will discourage Kenyans from importing cars.

Two, the imported car dealers and their families will feel the pinch. They would need more money to import newer cars.

Shall we see some of them close or merge? Lots of small-timers import cars then sell them through dealers at a commission. They will suffer too.

The consumers will lose too. Their choices of cars will be limited. Shall we find less of fuel guzzlers on our roads as consumers focus on smaller affordable cars? One interesting consequence of the draft policy is the rise in the price of imported cars as Kenyans rush to beat July 2019 deadline. If the policy changes, or is extended, Kenyans will have been ripped off. That is why the government should be firm on policy implementation.

More interesting is that if the policy is implemented, local cars will become expensive; no one would want to sell his car to buy a newer and more expensive car.

Will this increase pollution which would have been reduced by newer cars? While there are good reasons to limit the age of the imported car, this should be phased out say in five years.

That will give the market time to adjust. Too many Kenyans make a living from the second-hand car market.

Who does not know that Kenya is a hustler’s paradise? We could support this car age limit if Kenya was manufacturing cars so that the jobs created in manufacturing far outweigh those lost by imported car dealers.

Such an industry would involve the whole supply chain from making steel to car components including electronics and car designs. Assembling does not create enough jobs.

Will raising the car age limit to lead to a thriving underground economy if the neighbouring countries to do not raise their age limit? Focusing on the car age limit is a distraction from our failure to industrialise.

The big question is; should industrialisation be led by the government or private sector?

Should the age (or mileage) limit be set by the market or government? As you respond, let me drive off my imported Ractis that I recently upgraded from an imported Vitz…

-The writer teaches at the University of Nairobi