For decades, the roads in Kenya have been dominated by imported second-hand vehicles, particularly from Japan.
Today, however, the country’s automotive market is beginning to take a different direction as rising import costs, government incentives and growing local manufacturing gradually reshape consumer preferences and investment in the sector. New data shows that locally assembled vehicle production reached a record 13,692 units in 2025, an 18.5% increase from the previous year, reflecting renewed momentum in Kenya’s automotive manufacturing industry.
The growth has been driven by expanding assembly operations, the introduction of new vehicle models and government tax incentives designed to encourage local production. The shift comes as importing used vehicles becomes increasingly expensive. Higher import duties, excise taxes, Value Added Tax, the Import Declaration Fee and the Railway Development Levy have significantly raised the landed cost of second-hand vehicles. Depending on engine size and vehicle type, the total tax burden can now approach or even exceed the value of the imported vehicle itself, making ownership less affordable for many buyers.
Recent revisions to Kenya’s vehicle valuation system have further increased import costs for many popular models, prompting dealers to warn of higher showroom prices and softer demand. Importers argue that the new tax regime and valuation methods have made it increasingly difficult to maintain competitive pricing in a market long built around affordable used Japanese vehicles. At the same time, locally assembled vehicles are benefiting from favourable government policies.
Completely knocked down (CKD) kits imported for local assembly are exempt from the higher duties imposed on fully built imported vehicles, allowing assemblers to produce vehicles at a lower tax cost. The incentives form part of Kenya’s broader industrialisation strategy, which seeks to expand domestic manufacturing, create skilled jobs and reduce dependence on imported products.
Several global automotive brands have expanded their presence through assembly plants in Kenya in recent years, producing passenger cars, commercial vehicles, buses and increasingly electric vehicles for both the domestic and regional markets. Companies assembling vehicles locally include Isuzu, Toyota, Volkswagen, Peugeot, Mahindra and a growing number of Chinese manufacturers seeking to establish a foothold in East Africa.
The market itself is also evolving. While Japanese brands such as Toyota, Nissan, Mazda and Subaru continue to dominate Kenya’s used-car market, Chinese manufacturers are gaining visibility by offering competitively priced new vehicles equipped with modern technology and longer warranties. Their growing presence is gradually challenging long-held consumer perceptions and broadening choices for buyers.
Kenya’s transition towards electric mobility is adding another dimension to the industry’s transformation. The government has introduced new tax incentives for electric vehicle components and charging infrastructure as part of its National Electric Mobility Policy, while electric buses, motorcycles and passenger vehicles are becoming increasingly common on Kenyan roads.
Despite these changes, imported used vehicles are unlikely to disappear anytime soon. The eight-year import rule in Kenya, combined with the affordability of second-hand vehicles relative to new models, means they will remain an important part of the market for many households. What is changing is the balance of the industry.
In Kenya, local assembly is no longer viewed simply as an industrial policy objective but as an increasingly viable commercial proposition. As production volumes rise, new manufacturers enter the market, and consumers gain access to a wider range of locally assembled vehicles, Kenya is laying the foundations for an automotive industry that could serve not only domestic buyers but also the wider East African region.
