NAIROBI, Kenya, April 2 – As we look ahead to the automotive outlook for Kenya in 2023, it is crucial to consider several key factors that will shape the industry in the coming years.
Among these are the price of foreign versus locally used vehicles, the quality of the cars, the environmental impact of the industry, the inflation cost, and the economic impact.
In recent years, the Kenyan government has made efforts to control the importation of used vehicles in order to support the local automotive industry.
One example is by limiting the importation age for cars to 8 years. The aim is to keep reducing the limit with a plan to shift to a 5-year limit, which would be cars from 2018 to date, then a 3-year limit i.e. cars from 2020 to 2023, and finally to brand-new or zero-mileage cars.
According to the Kenya association of manufacturers, Kenya has an installed capacity of assembling 96,000 commercial vehicles per year but is only assembling 12,000 vehicles which leave a huge deficit to be met by the importation of foreign used cars.
The quality of the vehicles is also an important consideration. While imported vehicles generally have a reputation for being of higher quality, there has been a growing recognition of the quality of locally assembled vehicles.
With the government’s support for the local industry through reduced VAT and excise taxes, Kenyan automotive companies have invested in advanced technology and modern manufacturing processes, resulting in vehicles that are increasingly comparable in quality to their foreign counterparts.
As a result, we can expect to see an increase in the competitiveness of locally produced vehicles in 2023.
Another important consideration is the environmental impact of the automotive industry.
The industry is a major contributor to air pollution, a growing concern not only in Kenya but the world over. In response, the government has introduced regulations to reduce emissions from vehicles, including mandatory inspections for all vehicles to ensure safety measures, roadworthiness as well as compliance with emissions standards.
While these measures are important, they will likely increase the cost of vehicle ownership in the short term. However, in the long term, the implementation of cleaner technologies such as electric and hybrid vehicles will benefit both the environment and public health.
Inflation cost is another major factor that will impact the automotive industry in Kenya in 2023. The Kenyan economy has experienced significant inflation in recent years, which has led to the fall of the Kenyan shilling against the US Dollar.
This has, in turn, affected the cost of vehicle ownership, in addition to rising fuel prices, the cost of spare parts, and other components required for maintenance. The government’s efforts to control inflation will be critical in ensuring that the automotive industry remains accessible to Kenyan consumers.
The economic impact of the automotive industry is significant. The industry is a major contributor to the Kenyan economy, providing employment and generating revenue through taxes and other sources.
With the government’s support for the local industry, we can expect to see continued growth in the sector in 2023. This growth will have a positive impact on the broader economy, as it will create jobs and increase economic activity.
Sam Amir, Manager of Autochek Kenya said: “Kenya’s automotive industry is poised for growth, especially with continued government support in form of tax waivers and investment in technology and manufacturing processes, locally produced vehicles are becoming increasingly competitive in quality and price with their foreign counterparts. It is essential to strike a balance between the economic benefits of the industry and the impact on our environment from Kenyans acquiring new vehicles with lower emissions.”
The automotive outlook for Kenya in 2023 is complex and multifaceted. While there are challenges to be addressed, including the price of foreign versus locally used vehicles, the quality of the vehicles, the environmental impact, inflation cost, and the economic impact, there are also reasons for optimism.
With continued investment and support from the government, the Kenyan automotive industry is well-positioned to continue its growth and contribute to the country’s economic development in the coming years.
“The automotive industry will remain vulnerable to global headwinds in 2023, including the energy crisis, slower global demand and continued supply-chain disruptions. The only bright spot will be the electric vehicles market, with sales of fossil-fuel cars and commercial vehicles falling,” the firm’s Head of Legal Wilfred Aroko said.
“Increasing adoptions of electric vehicles and spiking demand for advanced safety, connectivity, convenience and driver assist features are noted to shape the modern automotive industry in Kenya. Increasing battery efficiency and EV charging infrastructure, and handling chip Shortages are potential challenges for Auto Manufacturers.”
