The government will not relent on its efforts to make the country a motor vehicles manufacturing hub, Industrialisation CS Peter Munya has said.
This comes as the government continues to implement the new National Automotive Policy (2019) that supports local assembling and manufacturing, as opposed to used second hand cars.
The government plans to reduce the age limit of used cars from eight years to five years by July next year with plans to ban the importation of second hand cars, mainly from Japana,in the long run.
“There is nowhere an industry that is a big driver of employment like automotive will grow if you decide it is a dumping market,” Munya told journalists in Nairobi.
“When Japanese are tired with their vehicles and they are supposed to destroy them as scrap metal, because that is what they do after eight years, they make money from them by selling them to Kenya,” he added, “if you continue like that you will never grow this industry.”
The government has already placed an embargo on the importation of some types of second hand spare parts as it moves to implement the National Automotive Policy (2019).
“Banning imports on sensitive second hand spare parts is because of safety for the public, accidents and also for consumers to get value for their money,” Munya said, “we are looking at spare parts that can be produced locally, there is a whole ecosystem being implemented as we conclude the finer details of the policy.”
Munya was addressing journalists on Thursday during the launch of the Kenya National Trading Corporation (KNTC) strategic plan for 2019-2024.
The government had planned to ban importation of vehicles of above 1500 cc which are five years and above starting July this year. An uproar by car importers has however seen the government push the directive to July next year to allow consultation with industry players.
Car dealers have however accused the government of leaving them out in the policy implementation process, even as they accuse the state of pushing the poor out of the car market.
“Which stakeholders is government involving? We have no idea because we are not being consulted in anything,” Kenya Auto Bazaar Association (KABA) chairman John Kipchumba told the Star on telephone.
The Car Importers Association of Kenya (CIAK) on the other hand has insisted locally assembled units are expensive by more than Sh600,000, compared to imported used cars, which will make the units unaffordable by majority of Kenyans.
While most low capacity imported used cars retail at between Sh600,000 and Sh1.2 million, the reduction on age and ban on use cars will take most units past the Sh2.5 million mark, CIAK says, which majority will not afford.
“As we have always said and will say it again, locally assembled cars will be more expensive and beyond many Kenyan’s reach. This is going to lock out millions of Kenyans from affording a car,” CIAK national chairman Peter Otieno told the Star.
He said the country also lacks the capacity to meet local motor vehicle demand where annual assembling capacity is at an average 5,000 units against an annual demand of 120,000 units.
Kenya imports between 10,000 and 12,000 second hand cars a month mainly from Japan which accounts for more than 80 per cent of imports. Other sources are UAE, UK, Singapore and South Africa.
“The stakeholders are involved in this process and the process has not been concluded, no decision for example changing the age limit has been made. It is also important to note that not every stakeholder will be satisfied,” Munya insisted.
The new motor vehicle policy is a 15-year programme that will be a build up to Kenya producing its own motor vehicles either partially or completely, according to the ministry.
“It is our plan to have the policy adopted by September, so given the time required for Cabinet to review it, we have given ourselves the timeline to conclude it by the end of 2019,” Industrialization PS Betty Maina said at recent investment forum in Nairobi.
The government plans to give a supportive environment for Research and Development in both automotive vehicles and components, including adaption of disruptive technologies. Plans are also in place to give tax incentives to local players.
Ministries, departments, agencies and other public entities have already started purchasing locally assembled units under a Treasury directive which came into place from July 1, this year.
“This will go a long way in spurring the growth of local auxiliary industries and enterprises and create employment opportunities to the youth,” National Treasury’s 2019/20 budget statement states.