Imported used car dealers have registered around a 25 per cent drop in vehicles coming into the country through the Port of Mombasa following new taxes that have pushed prices up.
Treasury imposed a 35 per cent duty on all imported cars which has seen car prices increase by between Ksh40,000 to Ksh180,000 depending on the model and engine capacity.
Coupled with weak shilling and harsh economic times, the taxes have increased the prices beyond the reach of most Kenyans, leading to a slump in imports.
Peter Kimwele, a car dealer, speaking to Kenyans.co.ke noted that the increase of duty from 25 to 35 is almost driving them out of business.
“The purchasing power of many Kenyans has gone down. When we spend extra money importing the cars, the increased cost is passed on to the buyer,” he explained.
With the increased costs, Kimwele explained that the cars had become unaffordable to most Kenyans leading to low volumes being cleared at the port.
He explained that on average, dealers were able to move 4,000 cars a month but the numbers started reducing from the month of July.
“Averagely, dealers here in Mombasa used to import and sell 1,000 cars a week. Nowadays we are struggling to hit 750,” he explained.
On how the import duty had affected prices, he explained that the cost depended on the engine size of the vehicle being brought to Kenya.
Kimwele explained that a 2.7 litre (2700cc) engine now attracts an extra Ksh180,000 in import duty which is passed to buyers.
He added that 1500cc and 1000cc engines were attracting an increased import duty of Ksh80,000 and Ksh45,000 respectively.
“Most dealers are shying away from importing because you can buy 50 cars and not be able to sell half of them,” he stated.
Fred Daudi, another car dealer who imports cars for individuals told Kenyans.co.ke that he has been struggling to get clients in the last two months.
“Kenyans were already struggling with a high cost of living and the increased import duty has made many Kenyans view buying a car as an unnecessary luxury,” he indicated.
Dealers had warned that the increase in duty would lead to an increase of 10 per cent in prices for imported vehicles.
The prices have increased more than the anticipated 10 per cent due to the downward spiral of Kenyan shilling against the dollar which is the main currency for import.
The dollar which is almost trading at 146 against the shilling has raised further the cost of cars making dealers wary of making imports.
