Transport

Car importers reject 5-year age limit

imports

Imported second hand vehicles at a yard in Mombasa. PHOTO | KEVIN ODIT | NMG

Second hand vehicle importers are up in arms against a proposed rule that reduces the age limit of imported vehicles from eight to five years.

The importers said the rule is punitive and meant to benefit a few individual business interests at the expense of Kenyans.

In various interviews with Shipping, importers said the ban will raise the price of vehicles making them too expensive for most Kenyans to afford.

Car importers Association of Kenya (CIAK) chairman Peter Otieno said the move will increase the price of vehicles by between Sh300,000 and Sh400,000, thus locking out many Kenyans and leading to multiple traders closing shop.

“For example, a Toyota Fielder that goes for Sh1.2 million will be retailing at about Sh1.7 million while a Vitz that costs Sh700,000 will cost Sh1.2 million. This will weigh heavily on Kenyans and affect our economy. Very few people will buy cars,” said Mr Otieno.

He said it will also affect collection of vehicle taxes. “I don’t know where they will get the trillions they put in their budgets if they interfere because this is one of the fastest growing industries in this country and the government gets a lot of money from it.

“As soon as they implement that policy they will not collect the projected tax. A good example is Uganda which wanted to reduce the imported vehicle age limit to 10 years but has now agreed with stakeholders to set it at 15,” he said.

Mr Otieno said that stakeholders were not consulted on the policy despite an earlier agreement with former Industry and Trade CS Adan Mohamed.

“When we met Mr Mohamed he agreed that we would have stakeholders’ consultations before coming up with any decision pertaining reduction of the age limit of vehicles.

“It is unfortunate that to date we have not had any meeting with ministry officials in regard to the same,” he said.

Mr Otieno said that a meeting called by the Kenya Bureau of Standard (Kebs) in Mombasa last December did not materialise.

“We had a meeting with the Kebs technical committee in Mombasa and no agreement was reached on the same. They later told us that we would hold another meeting this month in Nairobi. I have not seen communication to that effect,” said Mr Otieno.

He said the Mombasa meeting was for friends of Kebs and not all stakeholders.

He said most of their customers buy seven to eight-year old cars and are unlikely to buy newer models.

“In the December meeting I gave them an example of the DRC where the government set the vehicle age limit at 20 years. Taxes from the sector dropped. The government was forced to relax the law. On the other hand Uganda, Tanzania, Rwanda, Burundi and Sudan have failed to agree on a common regional vehicle age limit because it will be punitive to their citizens.

“What the Kenyan government fails to understand is that the vehicles we bring in are newer compared to other East African countries.

“We are talking of regional integration which means free movement of cargo and people. If we are sincere about this proposal then we should realise that the standards we are setting will not work.

“Those same old vehicles interfering with neighbouring countries’ environment will still interfere with ours. The vehicles come through Mombasa to Busia and Malaba and other border points; and our neighbours will still come to Mombasa using the old vehicles,” he said.

In a letter dated January 15 and addressed to the Kenya Private Sector Alliance (Kepsa) chief executive, Kenya Auto Bazaar Association chairman John Kipchumba said the draft policy has a lot of shortcomings that should be addressed.

“From the draft policy there is a sense of bringing in protectionism from the back door. This sector should be all inclusive; all sectors of the economy should be consulted and not just government officials and a few sector players who think they know it all. This country belongs to all of us,” part of the letter seen by Shipping states.

In an interview, Mr Kipchumba said that more consultations are needed.

“We are players in the sector yet we were left out. There is need to consult us even though the government wants to achieve one of the Big Four agenda tenets; manufacturing. That is not the way it is done. There must be consultation,” said Mr Kipchumba.

“We feel strongly that this policy should be looked at critically, it should embrace all sectors to create more jobs,” the letter says.

A section of the Draft National Automotive Policy seen by Shipping addresses the rate of tax applicable to second-hand vehicles.

“Given that the council intends to make the automotive market more vibrant and competitive, there may be urgent need to review this Act. Although the council would like to encourage purchase of vehicles from within the market rather than through importation, the present legislation appears to apply to all vehicles.

“The council may wish to review the legislation in line with proposed tax increments on used vehicles, and create several classes and criteria of how taxes would be applicable and the specific rate,” part of the draft says.