A State requirement for used cars to be assigned registration number plates before clearance and not when selling them has led to a backlog of 6,000 used vehicles at various Container Freight Stations (CFS) in Mombasa.
Car Importers Association of Kenya Chairman Peter Otieno says the rule has put importers at a disadvantage as their vehicles take several months before they can be sold in a market where buyers prefer cars with plates.
This, they said, has forced them to sell their cars at lower prices or offer discounts between Sh50,000-Sh200,000 per unit on those that may not be older but were imported earlier, and do not bear latest number plates.
Car buyers in Kenya tend to like newly registered vehicles with some demanding special numbers such as 001, 007, 010, 111, 222, 333, 555, 777, 999 and 786.
“This system is not fair to our members due to the fact that customers do not buy the motor vehicles but the new number plates therefore the one month or more registered number plates are considered to be old vehicles,” said Mr Otieno in a recent letter to the Kenya Revenue Authority.
Mr Otieno wants the vehicles released into the showroom from Container Freight Stations without upfront registration.
He says that if the rule is abolished, a trader who was importing 50 units per month will now import between 75 to 125 units, a move that will also raise taxes on used motor vehicles.
He said the importation of motor vehicles has also been reduced due to the wrong formula of depreciation by 20 percent, 25 percent and 30 percent yet when taxation is done, the applicable rates are 25 percent and 30 percent respectively.
Before 2009, importers of second had cars were allowed to clear imported used vehicles from the customs area without number plates as long as they bore Kenya Garage number plates.
However, the arrangement was withdrawn against Ciak members but was left intact for the franchise dealers of imported new vehicles.