New Age-Limit Rule on Second-Hand Cars Set To Increase Car Prices

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Proposals to lower the age-limit for used-vehicles imported into Kenya have been put forward and if implemented, Kenyans should expect to dig deeper into their pockets to buy the second-hand car imports.

Kenya only allows the import of second-hand cars not older than eight years while Tanzania has set its limit at 10 years.  An East African Community (EAC) resolution has recommended the slashing of the age limit for imported cars to five years by 2021, in a raft of measures intended to promote local assembly in the region.

Rwanda, Burundi and South Sudan do not have any such limits.  On average, cars in the region are 15 to 20 years old.

Second-hand imports are highly popular with majority of middle income Kenyans as they are cheaper. New cars are out of reach for the majority, with most dealers only focusing on a few wealthy buyers, government, big companies and aid agencies.

The EAC report argues that the disjointed policies on age limits among the EAC member states are flooding regional markets with old cars and stifling the growth of new car manufacturing.

“Lack of clear policy on age limits has been identified as a factor contributing to increased imports of used vehicles, while also posing adverse impact on environment, safety and health,” states a policy brief on the report that was submitted to a summit of the EAC heads of state last week.

Under the proposals, EAC countries would harmonise the age limits for used car imports at eight years by 2019. This limit would then be lowered to five years by 2021.

Used car imports make up about 85 per cent of the 2.2 million cars on the road in the region.

The report, carried out by the EAC secretariat and the Japan International Co-operation Agency (JICA), estimates that the region loses about $2 billion in foreign exchange every year on importing cars.

It is argued that with more stringent limits on the cars coming in the EAC, a window will open up for local manufacturing to thrive, to meet growing demand.

The report also recommends that the EAC invests in two large-scale assembly plants that will produce cars with a price range of between Sh516,200 ($5,000) to Sh1 million ($10,000).

The region should aim to produce 500,000 units per year by 2027.

“It is expected that the growing economy and expansion of the middle class will continue to spur the demand of vehicles in the EAC region,” says the policy brief.

Currently East Africa has an average motorisation level of 15 vehicles per 1,000 people, lower even than the African average of 44 vehicles per 1,000 people. Whether these proposals will be implemented remains to be seen.

EAC partner states have been trying to harmonise age limits on cars for more than a decade with little success.

ALSO READ: Higher import Taxes cut motor vehicle imports to Kenya by Sh31.7 billion

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