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Number of locally assembled vehicles up 66pc on demand

 

The number of locally assembled vehicles jumped 66.4percent in the quarter to March compared to a similar period last year, buoyed by improved demand on a rising economy.

Fresh data by the Kenya National Bureau of Statistics show that 3,045 units were produced between January and March this year, compared to 1,830 in a similar period last year. The January-March 2022 production performance is the highest in at least five years.

Production of locally assembled units is expected to jump sharply this year on deep tax concessions by the State aimed at improving sales of the units produced.

The Finance Act 2022, signed by former President Uhuru Kenya in June, exempted locally assembled cars from major taxes that are applicable on fully-built units imported from overseas markets such as Japan and South Africa.

The former Head of State fully adopted proposals by the Finance and Planning Committee of the National Assembly to deepen concessions for assemblers who qualify for the tax incentives by freeing them from a requirement compelling them to source at least 30 percent of spare parts locally.

The Treasury had in April announced plans to exempt locally assembled passenger cars from VAT and excise taxes.

“In order to encourage more investment, especially in the manufacture of passenger motor vehicles locally, I propose to exempt from VAT inputs and raw materials used in the manufacture of passenger motor vehicles,” then-Treasury Cabinet Secretary Ukur Yatani said in his Budget speech for the financial year 2022/23.

“Additionally, I propose to exempt locally manufactured passenger motor vehicles from VAT,” he added.

Presently, cars manufactured abroad attract an import duty of 25 percent, excise duty of 20 percent, and VAT of 16 percent, payable cumulatively, respectively.

Assemblers of passenger cars such as Simba Corp and DT Dobie enjoy exemption from the 25 percent import duty.

Data shows that sales for locally assembled vehicles rose to a record 70.6 percent of the total sales in 2021, moving 10,054 units compared to 4,195 units of fully-built imported vehicles.

The major assembly plants are Nairobi’s Isuzu, Mombasa’s Associated Vehicle Assemblers, and Thika’s Kenya Vehicle Manufacturers.    BY DAILY NATION   

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