Radical movements from Kenya government to transform the auto industry

01/28/2019

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Used cars have always been a go-to for many, but too much of anything could be bad. Check out how Kenya government deal with the dominant Tokunbo issue here!

For long, people have endorsed Tokunbo cars for sale, especially the citizens of Kenya, where the auto assembly industry has shown slow progress for many years. To some extent, individuals can benefit from those Tokunbo cars since they're cheaper than brand new. Particularly, buyers can easily use the same amount of money they would use on a brand new but ordinary brand to purchase a slightly used but more luxury car. 

On the grand scheme of the auto industry, it's not as good. The excessive import would suppress the growth of the domestic auto industry, as it competes indirectly with the brand new models. Aware of the reality, Kenya government had decided to put a restriction on used car imports. To be more specific, only Tokunbo cars that are either at its 4th year and less than 8th years of use are allowed to enter Kenya.

some-tokunbo-cars

Foreign used cars have long been an appealing segment in the auto market

At the same time, the government hopes to bring back the golden age of the assembly industry in Kenya, once brought to a halt by import law.

In details, the government wants to step-by-step reduce the over-reliance of the market on Tokunbo cars and instead shift the scale toward domestic manufacturing. For now, the foreign used accounts for more than three-quarters of the car selling segments, around 86 thousand cars in the year 2017 alone. 

a-car-frame-being-manufactured

Kenya adopts new laws in an attempt to recover the national assembly industry

With this movement, some overseas car manufacturers have moved their facilities back to Kenya, namely Peugeot SA and Volkswagen, after a long overdue period. 

Still, this wasn't enough to boost the brand new cars demands. Only around 15 thousand new vehicles were sold last year, with more than a half from 2 major car dealers, Toyota East Africa, and Isuzu Africa.

From the buyers perspective, some cannot afford brand new models. To solve this problem, the Kenya government allows cars with under 1500 cubic centimeters to be imported without special conditions.

Kenyan youth is willing to spend millions modifying their cars

For the local manufacturers, they will be exempted from many kinds of tax and also got a 50% discount on corporate tax. This decision has two benefits. It will both encourage local manufacturers to invest in their business, and also prospective investors to chip in big bucks in the long run, since they know their investment is backed by the government. 

>>> To update latest news in the auto industry in Nigeria and worldwide, visit Naijauto.com daily!

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