•Prices of imported units have jumped by up to 40 per cent.
•A section of local dealers are opting for grounded cars for refurbishment and sale.
Prices of used cars in Kenya continue to rise with the trend expected to be witnessed in the medium-term, amid disruption in the global supply chain.
Dealers say prices of imported units have jumped by up to 40 per cent.
The driving factors include a global vessel shortage being witnessed during the Covid-19 pandemic,as shipping lines adjust voyages to meet virus control measures and demand in some key regions such as the China-Europe trade route.
The shortage has led to an increase in freight charges which have gone up by between 20–25 per cent, according to the Shippers Council of Eastern Africa (SCEA), affecting cargo coming to Kenya.
The cost of shipping a unit from the key market of Japan has increased by up to $1,300 (139, 945), with a current average rate of $3,700 (398,305).
The final price in the market further includes the import duty of 25 per cent of the Customs value (CIF) of the vehicle (invoice value + insurance + freight charges), excise duty charged at 20 per cent, VAT 16 per cent and IDF charged at 2.25 per cent of the CIF value or Sh5,000, whichever is higher is payable.
The pandemic which has affected disposable income among households has also seen buyers ditch new cars for second hand cars, with South American countries emerging as the new leading destination for the units.
Market trends also show the US market is currently embracing used cars mainly from the local market, Europe and Japan, a move that has impacted global prices for the units.
The weak shilling against the US Dollar has also affected the pricing in the local market.
According to the Car Importers Association of Kenya (CIAK), a 1,500 cc is currently retailing at an average Sh750,000 up from between Sh500,000 and Sh600,000.
In Nairobi, the unit is reported to be costing up to Sh1 million.
A Toyota Fielder is retailing at Sh1.4 million on average from Sh1.2 million while a Toyota Axio is selling at Sh1.25 million on average, up from an average of Sh1 million.
“The cost of manufacturing new vehicles has also gone up which has seen their prices increase. People are now going for used cars including in markets such as the US. It has created a huge demand affecting the prices,” CIAK National Chairman Peter Otieno told the Star on telephone yesterday.
A number of buyers in Nairobi on Tuesday reported prices of up to Sh2.5 million for Mazda CX-5 with BMW X5 going for up to Sh6 million. The price of an used imported Subaru Forester is close to 3 million.
“There are fewer cars available because of the Covid-19 pandemic so prices for the few units available are higher than usual,” Nairobi-based car dealer, Robert Ndegwa, of The Car Guy Kenya company, told the Star, noting some dealers have been auctioned.
Under a normal business environment, Kenya imports an average 7,000-9,000 units a month, mainly from Japan (80 per cent ), United Arab Emirates, United Kingdom, Singapore and South Africa. This goes up to 12,000 units when the economy is doing well.
The high import bill coupled with the shortage of imported used cars in the market has seen a section of dealers source for much older cars, with some going for grounded cars for refurbishment and sale.
This, even as the Kenya Auto Bazaar Association (KABA) yesterday reported an increase in the prices of third generation cars (second-hand cars that have been used locally), which has gobe up by between 10–20 per cent.
According to KABA chairman John Kipchumba, a locally used Toyota Probox, common with businessmen, is currently going for about Sh600,000 at the weekly Jamhuri Auto Bazaar, up from between Sh350,000 and Sh400,000 pre-Covid.
The asking price for direct imported used one is now Sh1 million up from Sh750,000, Kipchumba noted.
“People are even looking for abandoned cars now, in the rural areas which they buy, refurbish and come to sale,” said Kipchumba.
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