Ever tried to buy a car in Kenya, new or used? You know the struggle. Even a modest car can cost more than you expect, especially compared to other countries. So why are cars so expensive in Kenya?
Well, it all comes down to the complex import duties, taxes, and fees car buyers face. These taxes make up a big chunk of the price of every car, new and second-hand.
In this article, we’ll break down why Kenyan car prices are so high and how factors like import regulations, taxes and the car’s age play a big role in the final price tag.
Cars in Kenya are Expensive
In Kenya, cars can range from moderate to sky-high depending on the make, model and whether it’s imported. You might find a car for Ksh 1 million but the same car can cost way less in Japan, India or the US. The difference in pricing is mainly due to Kenya’s high import duties and taxes.
Import Duties and Taxes on Vehicles
1. Customs Duty (Import Duty)
When you bring a car into Kenya, you have to pay import duty, which is a percentage of the car’s value. The amount varies depending on the type of car but can be between 25% to 40% of the car’s CIF (Cost, Insurance and Freight) value.
For example:
- If you’re importing a second-hand car from Japan worth Ksh 500,000, the import duty could be between Ksh 125,000 to Ksh 200,000 depending on the age and type of car.
2. Value Added Tax (VAT)
Kenya also charges a 16% VAT on the total cost of the car — including the customs duty, shipping costs and other charges. The more your car costs, the more VAT you’ll pay.
If your car costs Ksh 500,000, the VAT alone could be Ksh 80,000.
3. Excise Duty
Excise duty is another big tax especially on cars with bigger engines. The rate is based on engine capacity and can be between 20% to 30%. For example, cars with bigger engines (e.g. above 2000cc) have higher excise duty rates.
A 2500cc car may attract excise duty of 30% while a 1500cc car would be 20%.
4. Import Declaration Fee (IDF)
Before your car can enter the country, you have to pay an Import Declaration Fee. This fee is 1.5% of the car’s CIF value. While it may seem small, when combined with other taxes, it adds to the total cost of the vehicle.
5. Railway Development Levy (RDL)
On top of the duties, Kenya introduced a Railway Development Levy of 1.5% for all vehicles entering the country. This fund supports the Standard Gauge Railway (SGR).
Age of the Car affects Car Pricing in Kenya
In Kenya, a car’s age plays a massive role in determining its price due to the “8-year rule.” Under this rule, vehicles older than 8 years are not allowed to be imported into the country. This policy means that:
- Used cars under 8 years old still face high duties and taxes.
- Older cars (which would be much cheaper in other countries) simply cannot be imported, leading to fewer used car options on the market.
Example: A 10-year-old Toyota Corolla in Japan might be priced at Ksh 300,000, but due to import restrictions and high duties, it might cost Ksh 600,000 to Ksh 700,000 once it lands in Kenya.
How Demand Affects Prices
Kenya has a growing middle class and a thriving car market but supply and demand also plays a big role in pushing up prices. Popular cars like Toyota Vitz, Nissan Note, Honda Fit have high demand and as a result are sold at inflated prices.
- Example: The same 2015 Toyota Vitz can sell for Ksh 800,000 in Nairobi while the same car can cost Ksh 500,000 in Japan.
This also applies to SUVs and 4x4s — which are becoming more popular due to Kenya’s diverse terrain. People are willing to pay a premium for these cars despite the high taxes.
Government Regulations and How They Affect Car Prices
The Kenyan government uses taxes not only to generate revenue but also to regulate the car market. The Environmental Management and Coordination Act (EMCA) and National Transport and Safety Authority (NTSA) policies also affect car pricing.
For example:
- Carbon emission taxes are being implemented to encourage eco-friendly cars. Cars with high emissions face higher taxes which pushes up the price.
Pro Tip: If you’re looking for a more affordable car consider hybrid cars like Toyota Prius which have lower emissions and sometimes enjoy lower tax rates.
Can You Lower Car Costs in Kenya?
Though it’s hard to escape the high import duties there are ways to bring down the cost of buying a car in Kenya:
1. Buy Directly From Trusted Dealers
- Some car dealerships have access to bulk importation deals or can help you navigate the import process more affordably.
2. Buy Locally Assembled Cars
- Cars that are assembled locally (e.g. Toyota, Isuzu, Honda) have lower taxes and import duties since they’re not fully imported but assembled in Kenya.
3. Go for Smaller Cars or Older Models
- Choose small engine cars (e.g. 1.0L to 1.5L engines) for lower taxes and better fuel efficiency. Also consider older models that may still be within the 8-year import window but check the condition thoroughly.
Car Prices in Kenya Are Here to Stay
While import duties, taxes and regulations contribute to the high cost of cars in Kenya, it’s also clear they’re not going anywhere anytime soon. So if you’re buying a car in Kenya you’ll have to be prepared for higher prices and higher taxes than elsewhere.
But don’t let that discourage you. By being informed and exploring other car buying options you can still get a car that fits your needs and budget.