•Latest industry data by the Kenya Motor Industry Association (KMIA) shows the 11 major dealers of new cars (zero millage), sold a total of 563 units in January.
This is compared to 769 units sold the previous month (December).
Image: PCS
New vehicles sales in Kenya in January dropped by 37 per cent compared to December, as high taxes and a weak shilling slowed demand.
Latest month-on-month industry data, by the Kenya Motor Industry Association (KMIA), shows the 11 major dealers of new cars (zero millage), sold a total of 563 units during the first month of the year.
This is compared to 769 units sold in December, as dealers faced a tough operating environment occasioned mainly by new taxes and a battered shilling, coupled with a dollar shortage, which affected imports.
These factors pushed up prices of both new cars and imported second-hand units.
Prices for both have gone up since Kenya adopted a 35 per cent import duty, after the East African Community approved an application by the country to raise duty on motor vehicles last year.
"The changes have been upwards of 10 per cent. High prices are likely to dampen demand,” Isuzu EA General Manager, Commercial Finance, Gabriel Kanyingi had told the Star in September, a trend he indicated would hit sales.
New saloon cars are now asking an upward average of Sh3.6 million, on the lower side, up from Sh2.8 million.
During the month under review, Isuzu continued to dominate the new cars market with 191 units sold from the different showrooms, followed by CFAO (Toyota Kenya and DT-Dobie), which sold 189 units with the third biggest dealer by sales being Simba Corporation with 104 units.
Despite low industry sales, CFAO Motors Kenya managing director Arvinder Reel said the firm has reaped from the merger in April last year, local assembly and consolidation strategy.
The strategic merger of Toyota Kenya and DT-Dobie, he said, has allowed the firm to boost its local assembly capacity and deliver a more expansive portfolio of mobility solutions to a growing and diversified client base.
Strategic local assembly initiatives, including Sh300 million investments in the local assembly lines for Toyota Hilux Pick-ups, Toyota Hiace Passenger Vans and Toyota Fortuner Sports Utility Vehicles, also contributed to the accelerated growth last year.
Overall in January, single cabin pick-ups were the most sold units (90 cars) by the industry, followed by double cabins (68), reflecting sustained activities mainly in the transport and agriculture sectors of the economy.
New medium buses of up to 40 seats, widely used in the matatu industry, also recorded good sales (51 units) while small busses of nine 70 20 seats sold during the month totalled 47, albeit an overall poor run in the new cars business.
According to the Central Bank of Kenya’s recent CEOs Survey and Market Perceptions Survey, there has been reduced consumer demand in the market (not only vehicles), with respondents expressing concerns over increased costs of doing business.
This is attributed to the weak Kenya shilling, taxation, and higher energy costs.
“Nonetheless, respondents remained optimistic that economic growth would remain resilient and improve in 2024, supported by increased agricultural production,” CBK governor Kamau Thugge said.
Dealers of used imported cars have also reported increased prices since July following the move by the government to increase import taxes and the weak shilling.
The Kenyan Shilling depreciated against all major international trading currencies in the third quarter of 2023 compared to the corresponding quarter in 2022.
On average, the shilling ceded ground against the Euro, Pound Sterling, US Dollar and Japanese Yen by 30.3 per cent, 29.7 per cent, 20.6 per cent, and 15.3per cent, respectively, before slightly improving this year on a successful Eurobond buy-back and other inflows including loans from multilateral lenders.
“Prices have shot beyond the reach of the majority Kenyans,” Car Importers Association of Kenya national chairman, Peter Otieno, told the Star.
Used cars remain the most bought in the country with an annual average import of about 130,000 units, where an estimated Sh60 billion is spent on importing these vehicles mainly from Japan (80%).
Other key sources are UK, UAE, Singapore and South Africa even as the government continues to push for increased local manufacturing with tax incentives for assemblers.