Kenya car importers warn State over Sh200,000 import penalties

Second hand cars at shipping yard in Japan. Photo: Courtesy

MOMBASA: Importers of used cars have appealed to the national government to review penalties on car imports imposed during the reading of Budget warning that when implemented they will hurt several sectors of the economy and reduce revenue collection in Kenya.

Car Importers Association of Kenya (CIAK) observed that the imposition of Sh150,000 on imported cars of below three years old and Sh200,000 for imported cars aged above three years would cripple businesses.

According to the association, monthly importation of used motor vehicles through the port of Mombasa was estimated to drop from the current 9,000 units to 4,500 because many Kenyans would not afford to own cars as the prices would rise by Sh200,000.

The importers said they currently pay 20 percent as cost of insurance and freight (CIF) and 25 percent import duty.

The importers said they currently pay a total of Sh4.5 billion monthly as import duties but this may reduce to Sh2.5 billion if the penalties are effected.

The association also estimated that revenues generated through registration fees for used imported vehicles at the National Transport and Safety Authority (NTSA) may dive-nose from Sh168,795,000 currently to Sh84,397,500 if the new penalties are implemented.

The traders noted that the cost of the cheapest used imported car would shoot up from between Sh500,000 and Sh550,000 to Sh750,000 and hence lock out many people wishing to own cars in the country.

According to them, the youth would be the biggest losers if the cost was raised as majority of them could only afford purchasing the cheapest units.

"If the Finance Bill is signed this business will suffer a devastating blow. We are therefore asking the President not to sign this Bill to allow for consultations with stakeholders," said CIAK national chairman Peter Otieno.

Otieno noted that MPs and wealthy businessmen may not suffer any lose because they could afford fuel guzzlers but noted that the ordinary people depended on the cheap used imported vehicles.

"MPs will also imported fuel guzzlers and get import waivers but the ordinary Kenyans rely on the used importers vehicles that they can afford. The Sh200,000 extra cost they will be required to pay will make many Kenyans particularly the youth not afford cars," Otieno pleaded.

In a statement yesterday, Otieno noted that many motor vehicle showrooms in the country and investors from as far as Pakistani would be hard hit.

Mr Otieno noted that Kenya Ports Authority, clearing and forwarding agents, container freight stations, insurance companies and banks would be affected by the expected reduced car imports and sales.

"Kenyans who have secured employment in these firms will also lose because they depend on sale volumes," Otieno noted.