Over the decades, Kenya's car import landscape has undergone a significant transformation. What began in 1923 with the arrival of the first imported car—a Riley 12/50 Touring—has evolved into a robust and thriving sector of the national economy. This historical journey mirrors changes in consumer behavior, economic patterns, and regulatory policies that continue to shape the automotive industry today.

From the 1920s through the 1960s, Kenya primarily sourced its vehicles from Europe, the United States, and later Japan. Brands like Peugeot, Volkswagen, and Toyota were household names, largely because of their durability and ease of maintenance. Their mechanical simplicity made them ideal for local conditions, especially in areas lacking sophisticated service infrastructure. As more Kenyans sought personal mobility, the market naturally gravitated toward used vehicles—an affordable alternative that quickly gained popularity.

By the 1970s, Japanese cars had begun to dominate Kenya’s import market, a trend that held strong into the 1990s. Vehicles from manufacturers such as Toyota, Nissan, and Honda became favorites due to their fuel efficiency, affordability, and unmatched reliability. In response to this growth, the government introduced formalized import regulations, including structured customs valuation systems that determined the taxes levied on imported cars. These policies aimed to create order in a rapidly expanding market.

The Old Fixed Retail Price System

For many years, the Kenya Revenue Authority (KRA) used a fixed retail price system to calculate customs values. This model, while straightforward, had its flaws. It assigned set values to specific car models regardless of the actual purchase price, often resulting in inflated import duties. Importers regularly faced sticker shock, discovering that their tax obligations far exceeded expectations. As global market dynamics shifted, traders frequently challenged the system, arguing that it failed to reflect real-world pricing and economic realities.

Despite offering consistency, the fixed valuation system lacked the flexibility needed in a modern market. Cars that should have been taxed more favorably were lumped into outdated categories, leading to higher costs and unresolved disputes. The rigidity of this approach increasingly came under scrutiny, especially as the automotive industry and global trade practices evolved.

A New Chapter: The CRSP Schedule Reform

In response, the KRA is set to roll out a new customs valuation system starting July 1, 2025. The revised CRSP (Current Retail Selling Price) schedule introduces a market-driven method designed to better align with international standards. Rather than relying on predetermined figures, customs officers will now use actual purchase invoices as a primary reference. The new system will also consider depreciation based on the car’s age, global market trends, shipping fees, and other relevant expenses.

This shift is intended to enhance transparency, reduce long-standing disputes, and provide a fairer, more adaptable taxation framework. Importantly, the changes follow consultations with industry stakeholders, signaling a more collaborative approach from regulators. However, not everyone is optimistic about the impact.

Industry Concerns and Stakeholder Pushback

Many car importers and dealers have expressed concerns over the new system, particularly regarding affordability. For example, taxes on smaller, popular models like the Suzuki Swift, Mazda Demio, and Toyota Vitz are expected to rise—dramatically in some cases, by as much as 145%. This could make these budget-friendly options less attainable for the average buyer. On the flip side, luxury vehicles such as the Lexus LX570 might benefit from reduced tax rates, prompting criticism that the changes favor wealthier consumers.

Another sticking point is the KRA’s continued authority to revise declared invoice prices. If the agency deems a purchase value too low, it can adjust the taxable amount upward. This loophole could perpetuate disputes, even under the new system, and has led many stakeholders to question whether the reforms will truly eliminate unfair valuations.

What Lies Ahead?

As the July 2025 deadline draws near, the spotlight is firmly on the new CRSP schedule. Importers, car dealers, and consumers alike will need to stay alert, adapting to the changes and watching closely for any emerging trends in vehicle pricing and tax enforcement. While the intention behind the reform is progressive, its real-world impact remains to be seen. Will it bring much-needed fairness, or simply introduce a new layer of complexity? Only time will tell.