New vehicle sales plunge to lowest levels since Covid-19

The demand for new vehicles has this year slumped to the lowest levels since the pandemic. PHOTO | SHUTTERSTOCK

Demand for new vehicles has this year slumped to the lowest levels since the pandemic on the back of rising prices as a result of a weakening shilling, elevated inflation and climbing credit costs.

Industry data shows local sales for the first nine months of the year fell by double-digits to 8,715 units compared with 9,868 units in a similar period a year ago.

The 11.68 percent decline, according to Kenya Motor Industry Association (KMIA) data, came against a backdrop of a tough operating environment characterised by increased taxation on imports amidst a weakening of the Kenya shilling against the US dollar and the rising cost of borrowing.

Read: New vehicle sales drop 12pc on rising rates, pending bills

Outside of the pandemic year, local orders in the January-September period of the year are the lowest since 8,427 units bought in the same period in 2017.

At the height of Covid-19 infections, which prompted authorities to enforce travel bans and restrictions to curb the spread, sales of new vehicles plunged 25.10 percent year-on-year to 7,551 units in the nine-month period through September 2020.

KMIA, the industry lobby, did not give reasons for movements in monthly sales reports.

Automobile firms have this year complained of a raft of challenges, including shortages of some models, rising interest rates for customers financed by banks and accumulated pending bills which were yet to be settled by the government.

The industry data shows the falling demand, in an environment where household purchasing power has been eroded by high inflation amid largely stagnant earnings, hit all the major dealers, except for CFAO Motors Kenya.

Market leader, Isuzu East Africa, posted an 11.35 percent drop in sales to 3,946 units from 4,451 units in the prior year.

However, the market share of Isuzu — which sells pick-ups, buses, trucks and sport utility vehicles (SUVs) —remained largely unchanged at 45.28 percent, slightly increased from 45.11 percent a year ago.

The KMIA data, however, shows CFAO Motors Kenya, which merged the operations of Toyota Kenya and DT Dobie in May, bucked the trend in the industry to post growth in demand.

CFAO, which now sells multiple brands such as Toyota, Mercedes, Volkswagen and Hino under one roof, grew its sales by 6.07 percent to 2,376 vehicles compared with 2,240 units the year before.

That raised the dealer’s market share in the nine-month period through September to 27.26 percent from 22.70 percent a year earlier.

Simba Corp’s sales dropped 18.53 percent to 866 units. The market share of Simba Corp, which holds multiple franchises including Mitsubishi and Proton, narrowed marginally to 9.94 percent from 10.77 percent.

Tata Holdings sold 418 units, a drop of 18.36 percent over 512 units a year ago.

The review period saw the exit of CMC Motors, which used to hold the Ford, Mazda and Suzuki franchises, to focus on agricultural equipment.

Read: New vehicle dealers sales drop 14pc on prices surge

CMC, which sold 456 units in the January-September 2022 period, sold 18 vehicles earlier in the year before changing its business model.

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