New car owners turn to used spares as prices surge 50pc

A spare components store in Kisumu. PHOTO | TONNY OMONDI | NMG

Sparepart costs in Kenya have jumped by as much as 50 % within the final six months on rising transport prices and a weakening shilling, with second-hand components being the worst hit.

The value surge has pressured some consumers who would sometimes purchase new automobile components to additionally go for second-hand varieties that match inside their budgets.

Information gathered by the Enterprise Day by day from motorcar spare components sellers in Nairobi present {that a} nostril minimize for a Toyota Fielder, 2008 mannequin has elevated by 50 % to Sh85,000 whereas the worth of headlights for 2005 Japanese fashions equivalent to Toyota Premio rose from Sh20,000 to Sh30,000 within the final six months.

Headlights of a Toyota Corolla have elevated from Sh18,000 to Sh24,000 on common within the final six months.

Headlights are a number of the top-selling components in automobiles given their publicity to accidents and theft. The thriving boda boda business has additionally include a spike in small accidents involving motorists, which aren’t lined by insurance coverage.

A boot for a second fielder 2010 mannequin is retailing in Nairobi at Sh18,000 from Sh12,000 in January whereas a 2005 Toyota Premio entrance bumper is now promoting for Sh45,000, a 28 % rise within the interval below evaluation.

Subsequent regime

These costs could possibly be larger or decrease relying on the sellers and their location in Nairobi.

Automotive Importers Affiliation of Kenya chairman Peter Otieno says the costs of secondhand car spare components are unlikely to drop within the coming months as long as the shilling will proceed to lose worth in opposition to the greenback.

“Since second-hand car components are also imported in {dollars}, when the shilling takes a beating in opposition to the greenback count on costs to stay unchanged within the subsequent couple of months,” mentioned Mr Otieno.

“The federal government ought to are available in and permit us to make use of the previous taxes we have been utilizing earlier than as we wait to usher within the subsequent regime which should additionally give you beneficial taxes.”

The primary automobile parts sourced domestically embody batteries, tyres, seat covers, and home windows however they aren’t of excessive worth.

The most costly automobile components equivalent to engines and transmission are imported from abroad markets equivalent to Japan, Malaysia, Dubai and China.

The rise in used automobile half costs has seen sellers minimize the orders they make from supply markets equivalent to Dubai in a month by 30 % on costly transport charges to handle money flows.

Compounding the issue of used automobile components shortages is the weakening of the Kenya shilling and bottlenecks in international provide chains which have in flip inflated container and transport prices.

The shilling closed buying and selling at Sh118.70 items in opposition to the greenback on Wednesday in comparison with Sh113.58 in February and Sh107.85 a yr in the past, making imports costlier as used automobile components sellers want extra native forex to purchase international alternate to put orders for spares quoted in international forex.

Robust greenback demand from numerous sectors outstripped skinny inflows, merchants mentioned.

The federal government has set a situation for assemblers to supply components within the native market value at the least 30 % of the worth of passenger automobiles earlier than they are often exempted from value-added tax (VAT), which is charged at a fee of 16 %.

The VAT exemption is new and particular for assemblers of passenger automobiles and provides to the waiver of import obligation (25 %) and excise tax (20 %) loved by assemblers of all forms of automobiles.

The situation placed on the VAT waiver goals to push the corporations together with Simba Corp, which assembles Proton automobiles and DT Dobie (Volkswagen automobiles) to increase the checklist of parts made domestically to widen the worth chain.

An increase in the price of cargo of second-hand automobile components signifies that sellers should push up their costs by substantial margins to recoup their funding.

The rise in costs of spare components comes at a time when automobile costs are on an upward trajectory following international provide disruptions.

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