Dealers in new cars in Kenya recorded a slowdown in the 11-months to November as the weak shilling and higher taxes pushed up prices, amid reduced disposable income.
Latest industry data by the Kenya Motor Industry Association (KMIA) shows a total of 10,595 units were sold by the 14 major dealers in the country in the year to November, lagging behind last year’s sales with full year numbers expected to be lower.
A total of 13,352 units were sold within a similar period in 2022, which was also a drop from 14,250 units sold in 2021.
This are vehicles with zero mileage sold at showrooms, as opposed to used imported units which form over 85 per cent of vehicles on the Kenyan roads.
Majority of the new units sold during the 11 months were imported parts that are brought in and assembled in the country (8,329) while locally fully built units were 2,211, pointing to slow activities in the local motor vehicle building industry.
Trucks continued to top the category of new vehicles sold in the country, at 4,585 units, signalling sustained activities in the construction, manufacturing and transport sector.
Other notable sales were those of single cabins where dealers sold 1,671 units, station wagons (1,197) and double cabins (1,150), with small buses used in the matatu industry, luxury SUVs (Sports Utility Vehicle) and prime movers also recording good numbers.
This, as the agriculture, public transport and retail sector continued to remain stable, albeit the high production and costs of doing business.
Isuzu retained the lead in new vehicle sales with a 46.9 per cent market share, selling 4,973 units, followed by Toyota, which sold 2,820 units accounting for 26.6 per cent of total vehicles sold.
Simba Corporation sold 1,029 units of the Mitsubishi brand, closing the top three ranks with a 9.7 per cent market share.
Low sales in the market point to a challenging business environment amid a weakening shilling and taxes that pushed up prices of units.
According to the Central Bank of Kenya’s recent CEOs Survey and Market Perceptions Survey, respondents expressed concerns about weakened consumer demand, and increased costs of doing business attributed to the weakening of the 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.
Both new and imported used-car prices 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 (car prices) 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 now being depicted in the latest industry data.
New saloon cars are now asking an upward average of Sh3.5 million, on the lower side, up from Sh2.8 million.
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.
Used cars imported mainly on the dollar have had a significant jump in prices.
For instance, a Suzuki Alto, common in the taxi business, is now going for between Sh650, 000 and Sh700, 000, up from Sh550, 000.
Nissan Note, which was selling at Sh750, 000 is now asking Sh950, 000.
Toyota Fielder is going for Sh1.7 million up from about Sh1.2 million while a used imported Probox is selling at between Sh1.15 million and Sh1.2 million, up from Sh850, 000.
“Prices are shooting 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.