Easing inflation, sturdy shilling drive new car sales

Dealers in new motor vehicles sold 895 units in April as monthly numbers slightly went up, in the wake of a much stable shilling and drop in inflation.

This is compared to the 837 units sold the previous month by the 11 major key players in the Kenya motor industry, which has in recent times seen a number of mergers and new dealerships.

The jump in sales is also seen to be driven by sustained activities in key sectors of the economy mainly construction, transport, agriculture, manufacturing, retail and service sectors.

This is evidenced by the high number of pickups sold during the month at 196 units (both single and double cabin), trucks (278) and 182 medium buses of 21-40 seats which are widely used in the public transport sector, with the three categories accounting for the highest sales.

The Central Bank of Kenya’s leading indicators had at the beginning of April pointed to continued strong performance of the economy in the first quarter of 2024, pegged on robust activity in the agriculture and service sectors, particularly accommodation and food services, and information and communication.

There has been credit growth to selected key sectors among them manufacturing (13.6 per cent), transport and communication (7.5 per cent), trade (10.7 per cent), and consumer durables (7.4 per cent).

“The number of loan applications and approvals remained resilient, reflecting sustained demand particularly for working capital requirements,” CBK governor Kamau Thugge said.

Kenya Motor Industry Association (KMIA) data shows majority of the cars are Completely Knocked Down units. This are vehicles shipped in parts and assembled locally at the dealership or factory.

Year-to-date, dealers have sold 3, 183 units as some continue to struggle in moving the zero-millage units from the showrooms, with Kenyans going for cheaper second-hand imports.

Market leader Isuzu, with a total sale share of 52.8 per cent, sold 473 units with CFAO Motors Kenya (formerly Toyota Kenya) which merged with DT Dobie last May coming close with a sale of 285 units, translating to 31.8 per cent of the total industry sales.

Crown Motors (Nissan dealers), Salvador Caetano (Hyundai, Renault, Kia, Renault Trucks and Ford vehicles dealers) and Subaru Kenya had zero sales during the month.

Isuzu East Africa had projected easing of showroom prices and a stronger performance in the quarter going forward, as the shilling gained against the US dollar which had late last year made imports costly when it hit Sh160 to the dollar. It is currently averaging Sh130.40.,

“We expect continued uptake of locally assembled heavy commercial vehicles, trucks, buses, and other units,” Isuzu Sales and Marketing Director, Wanjohi Kangangi, said.

Local assemblers and dealers have been banking on KS1515:2019 standard by the Kenya National Bureau of Standards to help tame the high imports and support the growth of the local assemblies, as Kenyans continue to import an average 8,000 used cars per month.

The standard meant to tighten inspection and allowable imports unveiled in 2019 was however challenged in court, with a pending case to date.

Last month, Investments, Trade and Industry CS Rebecca Miano said the government is finalising requirements for the implementation of the National Automotive Policy,

This is in a fresh bid to leapfrog the local assembling industry and discourage importation of second-hand vehicles, even as it pushes for growth in the manufacture of electric vehicles.

The policy has been under formulation for the past three years, with several revisions and lobbying by dealers of new cars and second-hand imports, but is yet to be implemented amid protest by the latter.

“The policy will boost local content in vehicles manufacturing in Kenya and support our own carbon neutrality aspirations including green industrialisation,” CS Miano said.