The Industry and Trade Ministry has proposed a ban on the importation of second hand cars into the country.
Cabinet Secretary Adan Mohamed says this is part of a renewed push to attract more investment in the vehicle industry, which has underperformed for decades amid cutthroat competition from the second-hand car market.
“Over 10,000 second-hand vehicles come into our market every month. We want to make sure this does not happen in the long-term,” he said on Saturday, during the announcement of the country’s industrialisation agenda in Nairobi.
Vehicle manufacturers have in the past one-and-a-half decade remained skeptical about setting up assembly lines in the country, but huge inroads have been made in the past four months after three of the world’s top-ranking automakers agreed to invest.
France’s PSA group, the maker of Peugeot, on Saturday said it had signed a contract to start assembling two car models in Kenya.
PSA, which wants to reduce its dependence on European sales, will assemble the Peugeot 508 and 3008 models from kits of pre-assembled modules with local partner URYSIA, its long-standing Kenyan importer and distributor. The venture will initially produce about 1,000 vehicles annually.
German manufacturer Volkswagen, which recently reclaimed its position as the world’s largest automaker, has begun assembling cars in Thika. India’s Ashok Leyland is also planning to establish an assembly plant in Kenya.
Mohamed says the ban remains imperative for Kenya to become a hub for the automobiles.
“Old second-hand products are the biggest threat to our industrialisation plan in this country. For us to grow industries, we must phase out these old activities, but in a calculated and programmed manner,” he said.
The government has scrapped the excise tax on locally assembled cars and motorcycles in a bid to spur the manufacturing sector.
President Uhuru Kenyatta signed into law the Finance Act 2016, in September 2016, which was a result of a proposal by Treasury Cabinet Secretary Henry Rotich during his June 8-2016/17 budget statement.
Rotich also introduced an ad valorem 20 per cent tax on imported second hand cars, based on the value of the vehicle, repealing the specific duty rate he introduced in 2015-16 financial year, where vehicles more than three years old were taxed Sh200, 000 per unit.
Last week, Uhuru said the government has worked hard to remove trade barriers for Kenyan investors, allowing them to “invest in their own country.”