Car prices in Kenya set to go high

Car buyers in Kenya have been hit with a 35 percent import duty after the East African Community (EAC) approved an application by Kenya to raise duty on motor vehicles under the common external tariff.

The increase to 35 percent in import duty from the previous rate of 25 percent will see prices of imported cars increase to as much as Sh 100, 000 for all cars. These include those carrying 10 or more passengers, station wagons, racing cars and those involved in the transportation of goods among others.

Experts warn that “The increase in customs duty on imported cars will translate to about a 14 percent increase in the cost of importing vehicles.”

Increase to import duty for cars will push cost of living up even further

Car dealers are already struggling with the cost of importation owing to a weakening of the shilling against the dollar. The shilling has been on a decline for three years now, with little signs of the situation improving.

In February 2020, just before the outbreak of the Coronavirus pandemic, the shilling was trading at 100 against the US dollar. Since then, the dollar has strengthened by over 33% and by the time of publishing this article it was trading at Ksh 140.

Many emerging market currencies, including the shilling, have been hit by the global hike in interest rates led by the Federal Reserve in the US. With inflation in the US hitting 9% last year,

The EAC deal also approved a request by Kenya to keep elevated taxes on household gadgets such as mobile phones and television sets for another year in efforts to support tax measures by the William Ruto administration to raise Ksh211 billion ($1.5 billion) in additional revenue this financial year.