Kenya plans to gradually reduce the age limit of imported used cars in the next few years and eventually stop the import of used cars in 2030...

According to Kenya's "The Star" report, Kenya is planning an automobile industry policy that is enough to change the used car trade pattern in East Africa: it plans to gradually reduce the age limit of imported used cars in the next few years, and eventually stop the import of used cars in 2030. More market demand shifts to local assembly and manufacturing.

At present, this plan still faces fierce controversy between automakers and used car importers. Proponents believe that Kenya must leave market space for the local automobile industry; importers counter that local production capacity and prices are currently unable to replace the more than 100,000 imported used cars per year.

For China's second-hand car export practitioners, what is really worth paying attention to is not the "2030 ban" time point, but the possibility that the vehicle age threshold may be tightened step by step in the past few years.

According to the currently proposed policy roadmap, Kenya plans to gradually reduce the upper limit of imported used cars from the current eight years to:

2027: Maximum vehicle age of 5 years;

2029: Maximum vehicle age of 3 years;

2030: Falling to "Year Zero" actually means the end of traditional used car imports.

If this timetable is finally implemented, the impact on Kenya's used car supply chain will be very direct. The closer we get to 2030, the smaller the living space for old and low-priced used cars, and the market will be forced to migrate to quasi-new cars and locally assembled models.

It imports 130,000 vehicles a year, and 85% of them are used cars. It is not easy to "one size fits all"

Kenya is one of the most important used car import markets in East Africa. Currently, about 130,000 used cars are imported every year, worth approximately Kenyan Shillings, and used cars account for more than 85% of the entire automobile market. Japan remains the absolute largest supplier, accounting for about 80% of imported used cars, followed by the United Arab Emirates, the United Kingdom, Singapore and South Africa.

Compared with this huge import scale, local manufacturing capacity is still insufficient. Rita Kavashe, managing director of Isuzu East Africa, said that Kenya currently produces only about 15,000 vehicles for the domestic market every year. The capacity utilization rate of the entire automobile industry is about 34%, and a large amount of assembly capacity is idle.

She believes that restricting the import of used cars can direct demand to local factories, giving companies more confidence to expand production, invest in technology and cultivate local parts suppliers. But she also admitted that the policy must be implemented in stages, otherwise local manufacturing cannot fill the supply gap left by reduced imports in a timely manner.

Therefore, commercial vehicles may be restricted earlier than passenger cars. Kenya has major assembly companies such as Isuzu East Africa, Associated Vehicle Assemblers (AVA) and Kenya Vehicle Manufacturers (KVM), and already have relatively sufficient production capacity in the 3-ton to 30-ton truck sector; local production capacity for ordinary cars still needs to be expanded.

This is particularly noteworthy for China companies that manufacture commercial used vehicles in Kenya-if policies are promoted according to industry capabilities, trucks and other products may lose import policy space earlier than ordinary passenger cars.

Importers object: New local cars are still too expensive

The Kenya Automobile Importers Association (CIAK) has obvious reservations about the gradual ban on the import of used cars. The association believes that local assembly companies cannot yet meet the demand for small passenger cars, and restricting imports too quickly will only make cars unaffordable for ordinary consumers.

CIAK Chairman Peter Otieno pointed out that locally assembled vehicles are still significantly more expensive than imported used vehicles. If the "zero-age" policy is implemented, a limited number of local manufacturers may gain a relatively closed market.

The price case provided by Isuzu also illustrates this contradiction. A locally assembled Isuzu M-UX in Kenya sells for about 8.9 million Kenyan Shillings, while a second-hand SUV of the same type costs about 7.5 million Kenyan Shillings. Although the price difference is narrowing, it is still not a small number for highly price-sensitive Kenyan consumers.

Importers even question the logic that "old imported cars are more polluting" and believe that used cars from developed countries and about 5 years old may not perform worse than some locally assembled models in terms of emissions. Therefore, Kenya's future policy game is essentially to find a balance between "ordinary consumers can afford cars" and "supporting domestic manufacturing."

On the other hand, the Kenyan government's actions to support local manufacturing have become more and more specific. In June this year, witnessed by President William Ruto, Kenya and Japan signed a "Samurai" financing agreement, of which approximately 13.1 billion Kenyan shillings will be used for the development of the automobile industry to support local vehicle assembly, parts manufacturing, electric travel, Technology transfer and talent training. The larger financing package reached Kenyan Shillings 22.1 billion.

At the same time, the government continues to provide CKD with discounts for all parts assembly, hoping to attract more automobile companies to invest and produce in Kenya. Isuzu has also invested 1.3 billion Kenyan Shillings to build a new parts distribution center to serve the Kenyan and East African markets. Kenya's goal is obviously not only to import less used cars, but also to use the African Continental Free Trade Zone (AfCFTA) to build itself into an automobile manufacturing and export base in East and even Central Africa.

written in the end

The news from Kenya deserves preparation years in advance. Today's market still imports 130,000 used cars every year, and short-term demand will not suddenly disappear; but if the "8-year →5-year →3-year →0-year" route is finally implemented, the window for traditional high-age and low-cost vehicles will gradually close. For a market where the proportion of used cars exceeds 85%, policy transformation cannot be without resistance. However, once the direction is determined, the later the vehicle source structure is adjusted, the narrower the space left for pure used car trade will be.

Source: Guangdong Good Car

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