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Demand for new motorcycles falls to 2008 lows
Data from the Kenya National Bureau of Statistics (KNBS) indicate newly registered two- and three-wheelers fell 4.69 percent to 72,868 units last year.
Demand for new motorcycles has fallen for three years in a row due to rising taxation and cost of operation, pushing registrations with the National Transport and Safety Authority to more than two decades lows.
Data from the Kenya National Bureau of Statistics (KNBS) indicate newly registered two- and three-wheelers fell 4.69 percent to 72,868 units last year.
New purchases of motorcycles for business and personal use have fallen sharply in the last four years on the back of rising taxation and fuel prices.
The registrations, for example, stood at 291,553 motorcycles in 2021, but have since plunged by three-quarters to current levels. Demand for motorcycles, especially for use as taxis or boda bodas, had been consistently rising yearly since the government waived import taxes on them in 2008.
Besides high cost of the motorcycles, the sector is also grappling with a glut of units in the market amidst relatively high cost of fuel.
Currently, imported motorcycles attract a flat excise duty of Sh12,952 per unit with the exception of motorcycle ambulances and those locally assembled. A proposal to introduce an option 10 percent excise duty in the Finance Bill 2024 was rejected by lawmakers on the grounds that it will increase the cost of buying the units, which employ millions of unemployed youth countrywide.
The KNBS data has in the past shown that the average cost of importing of a motorcycle has more than doubled in the last two years, pricing out some players in an a flooded market where completion is high.
An average value for an imported unit in nine months through September 2024, for example, was Sh88,910 which is 4.85 percent higher than Sh84,801.45 in 2023.
The drop in registrations has come despite the government extending tax incentives to a local assembly of motorcycles in recent years to create jobs for growing skilled and semi-skilled youth.
For example, completely knocked down (CKD) parts of a motorcycle 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.
