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Economy

Motorcycle sales up 183pc after Sh10,000 tax removal

Boda boda riders in Kisii town. photo | jared nyataya | nmg
Boda boda riders in Kisii town. photo | jared nyataya | nmg 

Motorcycle sales jumped 183 per cent in the three months to March after the government made the bikes cheaper with the removal of the Sh10,000 excise duty per unit.

Official data shows that the number of newly registered motorbikes hit 51,139 in the first quarter of the year compared to 18,032 units in a similar period of last year.

Sector players said the removal of excise duty last September, which had been slapped on the bikes in December 2015, was the main driver of the growth.

“The growth reflects the benefit of the tax removal which has favoured both buyers and dealers in terms of affordability and demand,” said Isaac Kalua, the chairman of Motorcycle Assemblers Association of Kenya.

The December excise duty shook the motorcycles market, resulting in a sharp drop in sales and risking job losses, according to Dr Kalua.

The tax had threatened to reverse the economic gains in the sector that has attracted thousands of youth operating low-cost motorbike taxis known as boda bodas. To spur uptake, the State in 2007 exempted motorcycles below 250cc from 16 per cent value added tax.

Some popular models on Kenyan roads include Car & General’s TVS brand, Honda, Indian firm Bajaj brands like Boxer, Yamaha (Toyota Kenya) as well as low-cost Chinese brands.

But as the use of two-wheelers become popular, so have accidents rates, costing the economy millions of shillings in medical bills and deaths.

A US-based consultancy TechSci Research survey last year showed that South Africa, Nigeria and Tanzania are the leading motorcycle markets in Africa, followed by Kenya, Algeria, Uganda, and Egypt.

“Two-wheelers are becoming a key mode of transport in urban and rural areas,” says the report titled Africa Two-Wheeler Market 2011-2021.

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