New plan to lock out used car imports

A New Fleet of Isuzu trucks and Double Cabin Pick Ups at the General Motors (GM) yard in Nairobi. [Phillip Orwa/Standard]
The Government has proposed a raft of new measures aimed at protecting local car assemblers in what will now make it more difficult and costlier to import second-hand motor vehicles.

So determined is the Government to grow the automotive industry to the extent that the Ministry of Industrialisation has proposed developing a financing plan to enable individuals and corporates to buy locally made vehicles.

It is also willing to grant “scrapping rebates” to those willing to dispose of their aged imported vehicles and replace them with newer locally assembled ones.

These are some of the measures proposed in the National Automotive Policy which the ministry has now published for public discussion.

In the draft policy, the ministry said it would eliminate the significant competition that local assemblers face from the used vehicle imports by reducing the age limit of cars coming into the country. The Government plans to reduce the age limit for imported second-hand cars to five years from eight years.

It further proposes to lower this to three years by 2021. They would also be prioritised in government procurement.

“The Government will implement a phase-out plan to reduce the importation of used vehicles in the Kenyan market while facilitating the local manufacturers to bring to the market affordable vehicles for diverse domestic market segments that can replace the shortfall emanating from the reduction in used vehicle importation,” reads the draft policy, in which the State is also eyeing an automotive hub status through increased exports of locally produced units to the region.

The local vehicle assembly industry has been struggling, with the sale of new units dipping despite the increase in the number of firms that have set up vehicle product units locally.

Among the recent entrants in the local production space are Peugeot and Volkswagen which pushed production capacity to 34,000 from an earlier 29,000. This, however, remains largely unutilised.

Thus, even after the much-hyped re-entry of the two automakers into the Kenyan market, production has remained low, with the industry churning out 5,490 units in 2017 compared to 2015 when 9,760 units were produced.

The State of the auto industry is a far cry from what the country had in the late 1980s when local assembly peaked at 13,473 units, according to data by the Industrialisation Ministry.

It notes that the installed production capacity can be reached by protecting the assemblers.

“Under the right policy and investment conditions; full capacity single shift production of 34,000 units (which would create over 150,000 jobs) can only replace 38 per cent of total imported fully built units,” says the ministry in the draft policy.

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automotive industryMinistry of IndustrialisationCar Imports