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Why Are Cars So Expensive In Kenya?

Joy Waweru | 4 months ago
Why Are Cars So Expensive In Kenya?
Why Are Cars So Expensive In Kenya?

The prices of automobiles in Kenya have gone up over the last year sparking debate. Compared to most African countries, Kenya is ranked among the states with the highest price of vehicles. Both second-hand and new cars.
Several factors have contributed to the inflated prices of vehicles. For example, the budget-friendly Demio that once cost 600k is now sold at a minimum price tag of one million.
Luxury cars have gone up in price as well. So what exactly contributes to the high prices of automobiles?

Overall foreign used cars are more in the Kenyan car market because of their cheaper prices and higher quality.

Judging by recent government directives, the market could shun imported cars in favour of locally assembled vehicles through adopting certain policies
First, the government intends to eliminate VAT and excise duty on local cars while increasing taxes on imported vehicles.

Kenya imports vehicles from European and Asian countries either as fully assembled or as knockdown kits to be assembled in the country.

The final price of sale is subject to the cost is freight insurance, the cost of import duty, and the year of the manufacturer.

•Price of the dollar-the Kenyan shilling is weak compared to the dollar making imported cars from Japan, Singapore, and the UK a lot more expensive compared to the previous years.

•Transport Cost-shipping costs of used vehicles to the country.

•Shortage of Semi-conductor -the global shortage of semiconductor chips contributed to the increase in prices of used cars.
The shortage of chips was caused by the Covid -19 pandemic which brought about the closure of production factories.

•Used Cars Policies—Kenya’s program to phase out secondhand cars by 2026 per the Kenya Bureau of Standards guidelines.

The dealers margin -vendors of automobiles need to factor in their profit margin in every same. The process begins with purchasing the car through an agent or auction, importing the car, transportation costs, and service charges.
However, with reputable dealers, you are able to get better competitive rates because they buy cars in bulk, therefore, getting beat buying rates, best shipping rates, and storage rates.

Import tax-Taxes levied on imported vehicles constitute almost 60% of the total cost of a vehicle. To clear through Kenya Customs you need to pay the required duties and taxes.