A shortage of number plates has hit the market with motor vehicle importers grappling with heavy storage charges and cash flow problems.
Some businesses and individuals are repaying loans for cars they cannot use as they wait for the statutory plates, in some cases for more than a month.
“We have been facing heavy storage charges as the cars cannot be removed from the port without the number plates,” said Charles Munyori, the secretary of the used car import umbrella group, the Kenya Auto Bazaar (Kaba). “KRA only keeps on assuring us that the situation will normalise.”
The storage charges are based on the volume of vehicles and the number of days they remain at the Mombasa port or at container freight stations.
At least 2,500 imported vehicles are stuck at the port, according to the taxman. They are held up because of the poor supply of number plates from the Kamiti Maximum Security Prison where they are made.
KRA said it faced challenges supplying the market during the December import peak season. It said the Prisons Department was to blame for the crisis which has seen KRA supply between 50 and 100 plates at a time. Only the Prisons Department is allowed to make the number plates by law.
Registered used car imports are not allowed to leave the port without number plates unlike new vehicles imported by franchise holders which are offloaded and bonded in customs warehouses awaiting sale.
Mr Munyori said the imported cars were being detained at the port despite their owners having paid duty and customs clearance cash in advance.
KRA told the Business Daily that the situation would revert to normal this week.
Spokesman Kennedy Onyonyi said the Prisons Department had been having a problem with suppliers over payment for materials but the flow had started normalising last Friday.
“December demand is normally very high and we understand Prisons Department has been having liquidity issues. But we have gotten new plates and today we will get another 1,000,” he said.
However, Kaba who Tuesday said the situation had not changed fear the situation could get worse before it stabilises especially when three ships offload at least 2,800 more vehicles at the port from this week.
Imports are also set to rise as politicians flood the country with campaign vehicles ahead of the March 4 polls.
Industry insiders, however, said the number plate problem normally occurs every time a new registration number comes up as importers delay registration to take advantage of the newest numbers. The registration is now moving from the KBT series to KBU.
“People always rush to buy the new registration number for prestige causing the demand,” said Wachiuri Wanjohi, a car seller.
The crunch comes when car dealers are noting high import numbers even as domestic sales remain stagnant.
Mr Munyori attributed the contradiction to dominance of foreigners who have been importing and warehousing onshore. Notable among these are Pakistan-based players.
Official data shows that 37,899 cars were sold in the Kenya market between January and August last year against 8,118 new ones sold over the same period. Used cars accounted for more than 82 per cent of the sales.
This is the second time in four months that the Road Transport Department is clogging up the port with vehicles. Last August, thousands of vehicles remained for weeks at the port as KRA failed to secure logbooks to clear them.
The taxman normally insists on a logbook so as to protect customs payments while the number plate is meant to guard against dumping of transit cars in the local market.
KRA has in the past lost billions through the dumping of cars purportedly headed for Uganda and Tanzania.