Kenyan car dealers have opted for old and abandoned cars to refurbish and sell instead of dealing in new cars because the price of imported second-hand cars has increased by 40%.
According to report, Second-hand cars account for 80% of the cars on Kenyan roads.
Many factors have contributed to this trend of recycling and they include the effects of the Covid-19 pandemic, which has pushed more individuals into buying less expensive used cars and the shortage of global vessel, which led freight charges to rise between 20–25%.
TOS News learnt that the cost of shipping a unit from the key market of Japan has increased by up to $1,300. If one were to add the buying cost and taxes, it would be impossible to keep up with investing in new cars.
Taxes include an import duty of 25% of the Customs value (CIF) of the vehicle (invoice value + insurance + freight charges), excise duty charged at 20%, VAT 16% and IDF charged at 2.25% of the CIF value or Sh5,000, whichever is higher is payable.
Notably, a locally used Toyota Probox is currently going for about Sh600,000 while the asking price for a direct imported used one is Sh1 million.
John Kipchumba, Chairman of Kenya Auto Bazaar Association, confirmed that car dealers are bringing back fifteen to twenty years old vehicles into the market and this has brought about a boom for mechanics and workshops.