Are you benefitting from maximum depreciation of your car import?

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September 10, 2013

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autoimportSecond to my love for logistics is that for German engineering. Likely you’ve heard the phrase “German engineering” several times this year and more than enough times in your life to welcome the term with a sneer.

I own a German auto and have done so for well over five years. Would I be willing to go back to owning a Japan brand? Not likely. When I purchased my German auto, the dealer quipped: “A German car forgives the driver many mistakes on the road, which no other car can do.” I thought it to be a sales pitch but through the years his words have rung true.

German cars are well engineered and have earned a reputation of being incredibly high tech and remarkable performance machines. German cars are not the ‘gods’ in the auto world, however. In the late 90s, Mercedes released an M-class SUV which was considered dismally unreliable. Germany lost the reputation in reliability ratings; a blow they quite haven’t recovered from since.

Back to my first love. Logistics.

A good friend recently informed me that he had received a quotation for duty clearance by a clearing agent for a VW Jetta he wanted to import.

“Duty comes to almost a million for that thing!” he exclaimed.

My initial question of course had to be whether he received a quotation for a VW Toureg or Jetta since there is no way the turbocharged, 2000cc Jetta demand such duty.

On probing him further I realized he had informed the agent that he intends to import a 2009 Jetta! How many people get the luxury of doing that? Perhaps you’re wondering ‘What luxury?’

Here’s one crucial, open secret for importing a vehicle on a tight budget.

Maximum age of second hand vehicles

carsThe Law is very strict about the eight-year-maximum rule for autos imported into Kenya. This being 2013, no vehicle manufactured before 2006 will be allowed into the country.

While my friend was making no error in wanting to import the newer 2009 model he would not benefit from the full value of depreciation provided by the KRA for importing an older model. A 2006 model’s Current Retail Selling Price (CRSP) would greatly be depreciated (70% experts say) while a 2009’s would receive only 40%.

I calculated the duty for a 2006 model which came to KES. 440,000. Was he surprised at how significantly lower his duty would be for a 2006 model? I do not know. Did his jaw drop? Yes!

I’ll talk about the various taxes and charges to be incurred when importing vehicles into Kenya in my next blog post. You might need a calculator depending on what your math score was in high school!


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