Car marker General Motors East Africa (Gmea) has blamed low demand for new cars in Uganda on second-hand vehicles flooding the market.
Speaking to The Observer last week on the sidelines of the East African manufacturing business summit in Munyonyo, Rita Kavashe, Gmea managing director, said Ugandans have a huge appetite for used cars, making it hard for those selling new ones to thrive.
She said: “Of the ten imported cars into the Ugandan market, seven are [second-hand] and only three are brand new, making it hard for new car dealers to compete… “
For Kenya and Tanzania, said Kavashe, the demand for brand new cars has been increasing annually with Gmea commanding more than 25 per cent of market share in both countries.
“We have been market leaders in Kenya for three years in a row. The challenge we are finding in Uganda is that the demand of second-hand cars is very high,” Kavashe said.
Recently, Gmea opened a branch in Uganda through their distributor Mansour Automotive Company (MAC) East Africa to sell Chevrolet and Isuzu products. The demand has been dismally low.
This financial year, government increased taxes on used cars – 35 per cent on those between five and 10 years and 50 per cent on those above ten years – a move it said would protect the environment by discouraging people from buying them.
While this has made used cars more expensive than ever before, they are still cheaper than new ones. A Toyota premio, which went for Shs 14m in January, now goes for Shs 24m because of the taxes and the effects of a weak shilling. A new premio can go for more than Shs 35m. Used cars are among the top tax contributors to government.