ECONOMIC HARDSHIP

New car numbers dip as times get tougher - Economic survey

In Summary

• Number of Lorries and trucks bought also dropped to a five-year low in 2018, attributed to low private sector lending.

• Number of station wagons, the type mostly bought by government entities increased to an all time high of 64179 in 2018.

Imported cars at the Port of Mombasa./FILE
Imported cars at the Port of Mombasa./FILE

The number of ordinary Kenyans buying new vehicles dropped to a five-year low last year, an indication that the public has limited resources to spend on luxury.

According to the Economic survey 2019, Kenyans bought 10,504 saloon vehicles in 2018 compared to high of 15,902 in 2014.

There has been a gradual drop from 2014 to 2018 with Kenyans purchasing 14,369, 12,490, 11,376 saloon vehicles from 2015-2017 respectively, an illustration that Kenyans have limited disposable income.

The number of Lorries and trucks bought also dropped to a five-year low in 2018, an aspect attributed to low private sector lending.

Since the introduction of interest cap in 2016, bank lending to the private sector has been on declining trend, dropping to a low of 2.4 per cent in 2017.

Reduced lending to private business owners means less money for startups and business expansion.

Consequently, lenders prefer safer investments like government securities. A recent Market Perceptions Survey by CBK showed that growth in profit in some of the banks in Kenya was as a result of aggressive lending to the government.

“The general decline in new registration of buses, lorries and trucks is partly explained by the availability of rail freight and passenger services since 2017,” the survey indicates.

However, the number of tractors purchased increased from 2,032 tractors in 2014 to 4,040 tractors in 2018.

According to the survey, the decline in lorries and trucks can be attributed to the introduction of the affordable and quick Standard Gauge Railway (SGR) which has attracted importers ferrying commodities from the Mombasa Port.

 
 

However, the number of station wagons, the type mostly bought by government entities increased to an all time high of 64,179 in 2018.

The purchase of this type of vehicles has been on the upward trend since 2014, synonymous with the creation of devolved system of government.

Counties have since 2013 been setting up administrative infrastructure including vehicles for various departments.

The increased purchase of station wagons and tractors pushed up the overall number of motor vehicles bought during the period under review to 102,036 compared to 91,071 in 2017.