Kenya Used Car Market Size (2024 - 2029)

Kenya Used Car Market Analysis

The Kenya Used Car Market size is estimated at USD 1.23 billion in 2024, and is expected to reach USD 1.39 billion by 2029, growing at a CAGR of greater than 2% during the forecast period (2024-2029).

Kenya is one of the largest and wealthiest economies in East Africa and plays an important regional role in the target market. Kenya's sizeable middle class, progressive business environment, regional market access, and history of automotive assembly positions in the country, as well as a potential East African automotive hub.

Kenya is historically one of the world's top importers of used vehicles. According to official data, Japan accounted for 94.3% of the 62,495 used cars exported to Kenya in the 12 months to June 2023

Existing trade data precludes the analysis of used vehicle imports on a global scale because many countries do not differentiate between new and used vehicles. The Kenya Revenue Authority (KRA) hit used car importers with a new tax increase after capping the maximum depreciation rate from 70% to 65% of the traditional vehicle price.

In the first week of September 2023, the Deputy Director of Customs and Border Protection issued a directive to Kenyan Revenue Authority (KRA) officials, instructing them to implement a revised depreciation rate for vehicles. This directive mandates a tax increase of 14% or higher for vehicles manufactured in 2016. Notably, the majority of these vehicles are currently being imported by dealers, as Kenya's regulations limit the importation of used vehicles to those within an eight-year age range.

A car's value will decrease over time due to natural wear and tear from the time of manufacture, reducing its tax liability for up to 8 years. For example, an importer of a Toyota Premio with a current retail selling price (CRSP) of 3.27 million lice would have paid taxes on an estimated 1.096 billion lice as of Friday, compared to his 939,221 lice to date.

Excluding the import declaration fee and railway development tax, this translates into an increase in import duties, excise duty, and VAT of 156,537 shillings, or almost 14.29%. Dealers say the extra cost will probably be passed on to the buyer. The above values assume a vehicle displacement of 1800cc. Excise duty is 20-35% of customs value and import duty, depending on engine size.

The rise in imports took place despite soaring prices of imported cars due to supply hitches caused by coronavirus. Kenya's biggest source of imported cars is Japan, and it accounts for more than 80% of the overall used car market share. The overall car ownership in Kenya is approximately 35 for every 1,000 inhabitants. Kenya's used car to new car ratio lies on the cusp of moving from infancy to the growth stage, thereby signifying the start of a new era for the used car industry.

However, the gap that exists in correlation to some developed and developing nations is indicative of the high growth potential of both the used car and new car sectors in Kenya. The market for used cars in Kenya is continuously expanding. Moreover, the Kenya market is dominated by unorganized players who do not own inventory but rather thrive on their platform for C2C sales. They make revenue through commissions earned by facilitating the sale of used cars on their online platforms. However, the organized and semi-organized sectors are steadily catching up and are expected to play a significant role toward the end of the forecast period.

Kenya Used Car Industry Segmentation

A used car, a pre-owned vehicle, or a second-hand car is a vehicle that has previously had one or more retail owners. On the other hand, a certified pre-owned (CPO) vehicle is a pre-owned vehicle that has been extensively inspected (pre-purchase inspection) and expertly reconditioned. The term 'used' refers to the fact that the car has been driven and may have accumulated some wear and tear over its lifetime.

The scope of Kenya's used car market is segmented by vehicle type and vendor. By vehicle type, the market is segmented into hatchbacks, sedans, sport utility vehicles, and multi-purpose vehicles. By vendor, the market is segmented into organized and unorganized.

For each segment market sizing and forecast have been done on the basis of value (USD).