NTSA barred from impounding unregistered cars as dealers get 60-day reprieve

Car Importers and Dealers have a grace window period of 60 days to register all motor-vehicles sitting in their showrooms and yards before the National Transport and Safety Authority (NTSA) begins an impounding exercise.

Justice Jairus Ngaah stopped NTSA's intention to impound all the unregistered motor vehicles over a failure to engage the importers and dealers when they formulated the registration laws.

NTSA issued an impugned notice titled “Public Notice on Unregistered Vehicles by Motor Vehicle Dealers” that require3d all car dealers and importers to comply by December 16 2024.

The Car Importers Association of Kenya (CIAK) filed a petition objecting to NTSA's enforcement of the said notice.

“An order is hereby issued restraining the Respondent NTSA from impounding any motor vehicle held by a member of the Petitioner (CIAK) or from preferring any criminal charge against any such member, on the sole ground of non-compliance with the compliance deadline set out in the impugned Notice, unless and until the Respondent has accorded the Petitioner and its affected members a further period of not less than sixty (60) days from the date of this judgment, together with reasonable prior notice of that period, within which to complete registration of the affected vehicles,” said Justice Ngaah.

The judge said that the manner and timeline of the intended enforcement of the impugned Notice did not meet the requirements of fair administrative action under Article 47 of the Constitution and section 4(3) of the Fair Administrative Action Act, 2015.

Justice Ngaah also faulted NTSA for failing to respond to the Association’s memorandum dated December 10 2024.

However, the judge declined to nullify the said law in its entirety and declared it lawful under sections 6(1) and 6(1A) of the Traffic Act (Cap. 403), requiring all motor vehicles held by the car importers and dealers registered.

In their petition, CIAK said that impounding of the unregistered motor-vehicles and prosecuting them over the same would deprive them of property and imperil their livelihoods.

CIAK Chair Peter Otieno said for years, NTSA and the other relevant agencies permitted its members to clear imported vehicles, pay all applicable duty, and remove such vehicles from the customs areas (the Kenya Ports Authority and Container Freight Stations) into their showrooms without prior registration.

Otieno said that registration and issuance of logbooks and number plates would occur only upon the sale of a given unit to an eventual buyer.

“No vehicle could lawfully have exited a customs area without the sanction of all the relevant agencies, including the NTSA, and this practice was accordingly undertaken with NTSA knowledge and approval,” said Otieno.

He said the registration of vehicles before sale will prejudice its resale value irrespective of its true condition and millage as clients will perceive the vehicle as old.

“The commercial rationale advanced for this arrangement is that a vehicle imported and registered immediately upon clearance will, by the time it is sold, said to average some six months later, bear a number plate on a series that a prospective buyer will perceive as comparatively old, prejudicing its resale value irrespective of its true condition or mileage,” said Otieno.

Further, the Chair said that franchise dealers of new motor vehicles like DT Dobbie and CMC Motors are permitted by the same regulatory agencies to import and hold their stock without payment of duty or registration until the point of sale.

He said NTSA’s insistence on upfront registration of used vehicles, while affording new-vehicle franchise dealers the latitude to register only at the point of sale, amounts to discriminatory treatment as between the two classes of dealer.

On its part, NTSA said franchise owners of new motor vehicles import under the warehousing, re-warehousing or removal-to-another-warehouse regime provided for in section 34 of the EACCMA, whereas CIAK members import used motor vehicles under the home consumption regime provided for in section 50(1) of the EACCMA.

However, the road safety regulator failed to elaborate how the alleged high number of unregistered second had vehicles posed a security risk.

NTSA said that only locally-assembled motor vehicles are excluded from registration before sale because imported spare parts remain in the garage and yard until fully assembled.