A drop in supply from source countries such as Japan, logistical challenges, taxes and volatility in fuel prices have pushed up the cost of used cars by more than 15 percent, according to dealers.
The increase comes on the back of Covid-19 disruptions that has affected supply chains, among them ships and an escalation in commodity and fuel prices occasioned by the Russia Ukraine conflict.
Speaking in an interview yesterday, Mr Charles Kamunvi, the Associated Car Dealers chairman, told Daily that they are struggling to contain prices within expected ranges amid subdued demand and an increase in input costs.
“Fewer ships are coming to Africa and this means fewer units being cleared. Before Covid-19 at least 10 ships would dock at Mombasa every month, but this has since reduced to three,” Kamunvi said, noting that because of the Covid-19 related disruptions, the price of shipping a unit from the source market has gone up to $1,500 (Shs5.7m) up from $700 (Shs2.6m) depending on the size.
The prices, industry players also indicated are due to a ban on car imports older than 15 years, given that it has caused an annual increment thus forcing an increase in unit costs.
Currently, cars that were manufactured before 2008 cannot be cleared to enter Uganda. “Every year there are some cars that are cut off. Because of this we are limited on the choice. The vehicles which are coming into the country are 2008 series which are a bit expensive,” Mr Kamunvi said.
Government banned importation of cars that are older than 15 years to curb environmental pollution.
Car prices, Mr Kamunvi also noted, have been affected by inland transporting costs that have almost doubled.
Currently, he said, car dealers are paying drivers almost Shs600,000 for transporting a unit from Mombasa to Kampala up from Shs300,000 while the cost on fuel has gone up to Shs800,000 up from Shs400,000 for small vehicles while big cars are now consuming about Shs1.5m in fuel up from Shs1.2m. Car dealers have also blamed the increased to volatility of the shilling against the dollar, which in the last three months has depreciated from below Shs3,600 now about 3,800.
Because of this, dealers say, they have had to factor in the exchange rate volatility.
Prices of most car units have increased between 10 percent and 15 percent right from Covid-19 related disruptions.
For instance, a Toyota Fielder, which used to cost Shs27m before Covid-19, is now selling at between Shs30m and Shs32m.
Impact of ban
Mr Mustafah Ssemulinde, the proprietor of Semu Motors, which mostly deals in used cars recently said: “Because of the ban, prices of newer cars have gone up and when you factor in the condition of the car, taxes will be computed against this which makes the final cost high.”