Motorcycle imports look set to fall sharply for the second year running on the back of the rising cost of shipping the units amid growth in the local assembly industry.
Data from the Kenya National Bureau of Statistics (KNBS) show the number of motorcycles and cycles with an auxiliary engine fell by more than a third in nine months ended September 2024, touching the lowest level in at least a decade.
Traders and households ordered 40,840 units in the review period, down 36.23 percent from 64,039 units in the same period in the prior year.
Besides the high cost of motorcycles, the industry which is largely dominated by motorcycle taxis or boda bodas, is grappling with a glut of units in the market amid relatively high cost of fuel.
The units imported in the nine-month period were the lowest in at least a decade, pointing to a slowdown in an industry, that prior to 2022, had largely experienced a steady growth since 2008, when the government waived import taxes.
The rising popularity of motorcycles over the years has been linked to more Kenyans using them for the popular boda boda business or courier services, but the government has in recent years been targeting the sub-sector as an option to grow revenues.
Currently, imported motorcycles attract a flat excise duty of Sh12,952 per unit with the exception of motorcycle ambulances and those assembled locally.
A proposal to introduce an option of 10 percent excise duty contained in the Finance Bill 2024 was rejected by lawmakers on the grounds that it would increase the cost of buying the units, which provide employment to millions of unemployed youth countrywide.
KNBS data shows that the average cost of importing a motorcycle has more than doubled in the last two years, pricing out some players in a flooded market where competition is high.
The average value of an imported unit in the nine months to September 2024, for example, was Sh88,910, which is 4.85 percent higher than Sh84,801.45 in 2023.
The tax incentives extended to local assembly of motorcycles have seen a number of players turn to domestic production. For example, completely knocked down (CKD) parts of motorcycles for assembly are charged an import duty of 10 percent, while those already fully-built pay a higher 25 percent duty.
There is also no excise tax on CKD parts, while motorcycles are charged Sh12,952 per unit. Importers of CKD also pay lower import declaration fees and the railway development levy.
Some of the motorcycle assemblers include Toyota Kenya, which produces the Yamaha brand, Makindu Motors (Skygo) and Honda Motorcycle Kenya (Honda).
The tax benefits are designed to encourage local production, which creates factory jobs and supports auxiliary industries.
