The importation of cars in Kenya experienced a significant decline, reflecting the economic challenges faced by the population.
The International Trade Report from the Kenya National Bureau of Statistics (KNBS) revealed a substantial 65% decrease in car imports from July to September 2023 compared to the units imported between April and June of the same year.
According to the KNBS report, 64,359 units were imported into the country in the period from April to June. However, the subsequent months witnessed a sharp decline, with only 22,271 units imported, indicating a notable decrease in demand.
Notably, during the first quarter of 2023 (January to March), Kenyans imported 63,990 vehicles. The primary source of these imports is second-hand vehicles from Japan, with the United Kingdom and Thailand also being key markets for Kenyan importers.
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The decline in car imports during the third quarter of 2023 can be attributed to the depreciation of the shilling and an increase in fuel prices. The exchange rate during this period fluctuated between Ksh140 to Ksh148 against the dollar, making importation more expensive and prompting Kenyans to prioritize other expenditures.
Additionally, the cost of maintaining cars surged due to the rise in fuel prices, particularly in the third quarter of 2023. This period saw the implementation of a 16% Value Added Tax (VAT) on fuel, further contributing to the increase in costs.
Between July and August 2023, petrol retailed at Ksh194.68, diesel at Ksh179.67, and kerosene at Ksh169.48. Although prices remained unchanged from August to September, a subsequent review by the Energy and Petroleum Regulatory Authority (EPRA) in September led to a significant increase. Petrol saw a rise of Ksh16.96 per litre, while diesel increased by Ksh21.32 per litre.
EPRA attributed these price hikes to the increased costs of importation and the exchange rate, as fuel products are imported in dollars.
Consequently, petrol, diesel, and kerosene were announced to retail at Ksh211.64, Ksh200.99, and Ksh202.61, respectively, in Nairobi, effective midnight, inclusive of the 16% VAT as per the provisions of the Finance Act 2023 and the Tax Laws (Amendment) Act 2020, along with the revised rates for excise duty adjusted for inflation as per Legal Notice No. 194 of 2020, as declared by EPRA at that time.
