New car sales by dealers in Kenya recorded a 45.2 per cent rise in the first quarter of this year compared to last year, buoyed by increased activities in key sectors of the economy.
Kenya Motor Industry Association (KMIA) data shows during the quarter (January-March), the 11 major dealers in new vehicles (zero mileage) sold a total of 3,298 units compared to 2,271 units sold in the same period last year.
The dealers attribute the growth to improved demand mainly from transport, agriculture and construction sectors, even as the government remains a major customer.
Improved credit access following interest rates cut and stable shilling against the US dollar have also helped stabilise the market.
The PSV (Public Service Vehicles) industry mini buses and large inter-city buses replenishing their aged fleet under new leasing programme have driven uptake according to Isuzu East Africa (former general motors).
“Agriculture and last mile distribution continue to show recovery. There is increased activity of trade in agriculture across East Africa. The construction industry is also showing signs of recovery with some of the contractors beginning to receive some of the pending bills. The interest rates beginning to come down has also helped,” managing director Rita Kavashe told the Star on Thursday.
In an earlier interview, CFAO Mobility Kenya managing director, Arvinder Reel, had projected a strong industry performance this year after the company recorded an increase in its market share to about 33 per cent last year.
“We are looking forward to increasing our footprint and sale more,” Reel told the Star.
CFAO, which is a merger of former Toyota Kenya and DT Dobie is banking on increased local assembly after securing a majority stake (98%) in Thika-based Kenya Vehicle Manufacturers (KVM), following the divestment of Chinese company CMC Holdings and Treasury, to drive sales.
“We are looking at reviving the assembly plant and increase Knocked Down imports for local assembling,” Reel said.
Isuzu and CFAO remained the biggest movers during the quarter under review with sales of 1,648 and 959 units, respectively.
Simba Corporation (former Simba Colt Motors) came a distant third with 301 vehicles sold during the three months.
Trucks were the most sold at 1,349 across all the dealerships followed by pick-ups at 804 while buses sold totaled 560 (both small, medium and large), signalling strong activities in transport and logistics, agriculture, manufacturing and construction sectors.
The CEOs Survey and Market Perceptions Survey conducted by the Central Bank of Kenya in March revealed sustained optimism about business activity and economic growth prospects for the next 12 months.
“The optimism was attributed to the stable macroeconomic environment, favourable weather conditions which are expected to benefit agriculture, continued decline in interest rates and stability in international oil prices. Nevertheless, respondents expressed concerns about subdued consumer demand and high cost of doing business,” CBO governor Kamau Thugge said in the Monetary Policy Committee (MPC) briefing last Tuesday.
Dealers are expecting the interest rate cuts, which CBK made a fifth consecutive reduction last week from 13 per cent in June last year to the now 10 per cent, will help ease access to credit hence stimulate economic growth and uptake of vehicles for key projects in manufacturing, real estate, transport industry among other sectors.
A sizable percentage of new vehicle sales, mainly for companies and individuals, are financed under asset plans by banks.
Leading indicators of economic activity point to improved performance in the first quarter of 2025, according to CBK, with real GDP growth projected at 5.4 percent, supported by resilience of key service sectors and agriculture, expected recovery in growth of credit to the private sector and improved exports.
“This outlook is subject to domestic and external risks,” Thugge said.
This year’s outlook, if achieved, will be an improvement from the slowed down in 2024 when growth is estimated at 4.6 per cent compared to 5.6 percent in 2023, mainly reflecting deceleration in growth in most sectors of the economy.
