In an updated draft National Automotive Policy, the ministry is proposing a total ban on importation of vehicles and spare parts where Original Equipment Manufacturers already have a local presence.
“Additional tax will be charged on any models outside the rationalized list,” says the draft policy, while holding that there will be “a consultative and open process to develop criteria to determine the models of motor vehicles to be used in the country.”
Industry and Trade Secretary Peter Munya argued that the proposal gives incentives for the local motor vehicle industry to grow.
However, while the move is intended to boost Kenyan manufacturers it will hurt importers.
“It is the way to go because you need to build demand to attract investors in the capital-intensive vehicle manufacturing sector.
“Choice is always limited, sometimes even by availability. As the economy grows, you can expand the list of approved models,” said Mr Munya.
The policy shift is intended to create jobs in local car assembly plants that are currently operating at only 16 per cent capacity, producing an estimated 5,000 vehicles per annum against an installed capacity of 34,000 cars.
The proposal could, however, prove costly for Kenya’s middle class, who normally in most cases prefer to buy the relatively cheaper second-hand imports as their first car.
Locally assembled vehicles in Kenya currently include the Volkswagen Polo, Peugeot, Mobius, Nissan trucks, Hino trucks and buses, HB trucks, Hyundai trucks, Ashok Leyland trucks, MAN trucks and buses, trailers and semi-trailers among others.
Rita Kavashe, the chairperson Kenya Motor Vehicle Industry Association (KMI) and chief executive of Isuzu East Africa, welcomed the news adding that mass local production of new vehicles would provide sufficient numbers to sustain related local content supply industry and boost overall economic growth.
“The country would develop standards for the vehicles to be produced locally,” she said, regarding concerns over the quality of locally assembled cars.
Kenya Auto Bazaar Association Secretary-General Charles Munyori isn’t enthusiastic, however, about the new development arguing that the draft automotive policy “smells of protectionism that should not be happening at this point in Kenya’s economic history.
Market forces should be allowed to play out and consumers should not be penalised for exercising their choice,” he argued.
The draft automotive policy, which is in the process of being developed into law, has previously also proposed an age limitation for imported second-hand cars from eight to five years.