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Used vehicle importers sue to stop number plates rule

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Economy

Used vehicle importers sue to stop number plates rule


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Second hand cars being offloaded from a Cargo Ship at the Port of Mombasa on 7th July 2021. FILE PHOTO | NMG

Summary

  • Importers of used cars have gone to court seeking to stop a requirement that their vehicles be assigned registration number plates at the point of clearance.
  • They say this has put them at a disadvantage if they take months or years to sell their vehicles in a market where buyers prefer the latest number plates.

Importers of used cars have gone to court seeking to stop a requirement that their vehicles be assigned registration number plates at the point of clearance and not when selling them.

They say this has put them at a disadvantage if they take months or years to sell their vehicles in a market where buyers prefer the latest number plates.

This, they say, force them to offer discounts — which can amount to losing their entire margins of Sh50,000 to Sh200,000 per unit — on vehicles that may not be older but were imported earlier and do not bear the latest number plates.

The Car Importers Association of Kenya (CIAK) says used vehicle importers are being discriminated against since formal dealers and other importers of new cars are allowed to register their vehicles at the point-of-sale.

Their rivals, who are allowed to keep their imports at the bonded warehouses, are also not required to pay customs and excise duty before the vehicles are sold.

The association says the Kenya Revenue Authority (KRA) and National Transport and Safety Authority (NTSA) require its members to pay applicable fees, taxes and to register their vehicles before removing them from the customs holding areas.

“Effectively, a motor vehicle imported by franchise dealers will attract a registration number that may be much more current than an imported used motor vehicle despite the fact that they may be held by traders for the same period prior to the sale of each unit to the end user,” argues the lobby.

In its petition at the High Court, the lobby wants a declaration that KRA and NTSA have violated the Constitution by imposing the registration and customs and excise duty rules on used-vehicle importers.

It says before 2009, they were allowed to clear imported used vehicles from the customs area without number plates as long as they bore Kenya Garage number plates.

“However, the arrangement was withdrawn against CIAK members but was left intact for the franchise dealers of imported new vehicles,” the petition states.

Ciak says its members have suffered huge economic losses as buyers seek large discounts on the basis that the vehicles were registered a long time ago, a situation that does not happen with imported new vehicles.

The association argues that the requirement for used imported vehicles to have number plates before they are sold is unreasonable and amounts to discrimination.

Ciak says it has discussed the issues with KRA and NTSA several times but the agencies have ignored its requests.

“This means that the petitioner’s members continue losing income which has affected their economic and social rights,” argues Ciak.



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