The value of imported cars in the first quarter of 2020 increased by 16.86 percent, new data shows.
The report by Kenya National Bureau of Statistics shows Sh22.24 billion vehicles were imported in the first three months of the year compared to Sh19.04 billion in the corresponding period in 2019.
The units numbered 23,630 compared to 20,324 in Q1 2019, representing 3,306 increase over the period under review.
The figure in the quarter, however, represents a 24.4 percent or 7,627 decline compared to the 31,257 units shipped in the three months to December 2019, as new taxes that led to increase in retail prices affected demand.
The government increased excise duty to 35 percent from 25 percent under the Finance Act 2019 for motor vehicles with engine capacities exceeding 1.5 litres, taking effect on November 7.
The tax led to increase in retail prices of both new and used cars, trucks and buses by more than Sh1 million. Vehicles attract an import duty of 25 percent, excise duty (now at 35 percent) and value added tax of 16 percent, payable cumulatively and in that order.
The increase in importation in the quarter, however, follows a 25 percent drop in sale of new vehicles in the country in the first five months of the year, compared to a similar period in 2019.
Data from Kenya Motor Industry Association show the industry sold 3,811 units of new vehicles from January to May, compared to 5,101 units in same period last year.
According to Dinesh Kotecha, CEO Simba Colt Motors, the drop is linked to the global health pandemic that has disrupted the market as banks shy away from lending in order to maintain capital flows.
“Covid-19 pandemic has made a lot of people shelve plans on buying new vehicles to see how things turn out,” Mr Kotecha said. “Banks are also currently financing trucks to businesses with consistent cash flows.”
The importation of the vehicles is also staring a possible dip in the coming quarters after Kenya Revenue Authority passed the proposed Current Retail Selling Price.