In the 11-month period leading to November, new car sales in Kenya witnessed a considerable slowdown, grappling with the challenges posed by a weakened shilling and escalated taxes. The Kenya Motor Industry Association (KMIA) reveals that the 14 major dealers in the country collectively sold 10,595 units during this timeframe, a notable dip from the 13,352 units sold in the same period the previous year. This trend is indicative of a broader struggle fueled by increased prices and a reduction in disposable income.
Trucks emerge as the frontrunners in the new vehicle category, with 4,585 units sold, underscoring sustained activities in the construction, manufacturing, and transport sectors. Despite the downturn in new car sales, used cars continue to dominate the market, with an annual average import of approximately 130,000 units, amounting to an estimated Sh60 billion in expenditure, primarily on imports from Japan.
The majority of new units sold during this period were imported parts assembled within the country (8,329), while locally fully built units accounted for 2,211. This signals a sluggish pace in the local motor vehicle building industry. Isuzu maintained its lead in new vehicle sales, securing a 46.9% market share by selling 4,973 units, followed by Toyota with 2,820 units, representing 26.6% of total vehicles sold.
The economic challenges are further highlighted by the Central Bank of Kenya’s recent surveys, expressing concerns about weakened consumer demand, increased costs of doing business, and a generally challenging business environment. Despite these challenges, respondents in the survey remained optimistic about the resilience and improvement of economic growth in 2024, supported by increased agricultural production.
Both new and imported used car prices have surged since the imposition of a 35% import duty, approved by the East African Community last year. Isuzu EA General Manager, Gabriel Kanyingi, had earlier warned about the potential dampening of demand due to rising prices, a prediction validated by the latest industry data.
New saloon cars now command an average of Sh3.5 million, up from Sh2.8 million, reflecting an increase of over 10%. Similarly, prices for used imported cars have risen, attributed to the government’s move to increase import taxes and the depreciation of the Kenyan Shilling against major international currencies.
The depreciating shilling has had a significant impact on used car prices, with models like Suzuki Alto, Nissan Note, Toyota Fielder, and Probox experiencing notable hikes. The Car Importers Association of Kenya national chairman, Peter Otieno, expressed concern that these escalating prices are pushing vehicles beyond the reach of the majority of Kenyans.