Import of used cars declines as traders struggle

A Car Carrier, "MV Morning Calm" at the port of Mombasa. Traders are struggling to make sales because of reduced buyer purchasing power. [File, Standard]

Despite the Port of Mombasa registering a 14.1 per cent increase in cargo last year, dealers in imported used cars are grappling with a decline in sales that has led to a dip in import of vehicles.

Reports indicate that nearly 400 Mombasa showrooms selling used cars, mainly bought at several open and online auctions in Japan, are struggling to make sales because of reduced buyer purchasing power.

Traders said before 2020, up to 200,000 vehicles could be imported a year, but there has been a notable decline due to unpredictable fiscal policies that has led to the decline in Kenyans’ purchasing power.

“Business has been going down because of less cash flow. Most used car dealers are struggling,” said Car Importers Association of Kenya (CIAK) national chairman, Mr Peter Otieno.

Statistics from Kenya Ports Authority KPA indicate that 123,826 used cars were imported in 2019, in 2020 the units marginally declined to 101,220 before they picked again in 2021 to 126, 415.

However, in 2022, the import of used cars through the port of Mombasa dropped to 99,239 before the figure plummeted to 70,275 in the year 2023. By August last year, 40,000 units had been imported.

The CIAK chairman attributed the high number of vehicles handled in 2021 to a backlog resulting from Covid-19 challenges.

“We have not received figures for the whole of 2024, but we could not have hit 200,000 unites in four months. The trade is on a downward spiral despite increased volume of cargo at the port,” said Otieno. 

Last week, Kenya Ports Authority (KPA) managing director William Ruto was upbeat after the port registered 41.1 million tonnes handled last year compared to 35.98 million tonnes handled in 2023.

“This growth of 5.1 million tonnes, or 14.1 percent, demonstrates our resilience and capability to manage increasing trade volumes despite global disruptions,” Ruto stated.

Mr Otieno said increased volume at the port of Mombasa was largely because of growing population served by the port, including the transit countries, but did benefited used imported car dealers.

Mombasa city has in the recent years witnessed mushrooming of showrooms along most major roads, giving an impression of booming used car business in the country.

Yesterday, Otieno said the most showrooms are owned by erstwhile partners parting ways and establishing their own businesses.

“These are my members and I know that some showroom operators have been moving from one site to another as they look for sites offering better rents. It is not the growth in the sector,” said Otieno.

Meanwhile, CIAK has appreciated the government for agreeing on a block year in determining the age of used vehicles allowed to be imported into the country whose maximum stands at eight years.

Otieno noted previously government agencies could determine the age in block year while others consider months causing panic and import rush in the market.

A vehicle of seven to eight years attracts 65 percent duty from previously 70 percent, six to seven years (60 percent), and 55 percent for five to six old vehicles whose duty stood at 50 percent previously.

Before that, seven to eight-year-old vehicles attracted 70 percent duty, six to seven (60 percent), five-to-six (50 percent), four-to-five (40 percent), three-four (30 percent), two-to-three (20 percent), and one-to-two attracting 10 percent duty.

“Let it go like before. Low taxes will attract more revenue in the long run,” Otieno said.