By Jackson Okoth
New vehicle dealers continue to experience a drop in sales as high cost of credit turns away prospective car buyers. This follows Central Bank of Kenya’s (CBK) decision to keep the cost of credit high, a move that has hit the pockets of many car buyers who are now shying away from showrooms, or open-air second hand car markets.
Data from the Kenya Motor Industry (KMI) shows that while the May sales figures stood at 1,085 units, this was a 4.6 per cent decrease compared to a corresponding period last year.
General Motors East Africa (GMEA) was the leading new cars dealer in May, racing past archrival Toyota Kenya, which has been the most dominant player in the local new cars market.
GMEA sold 381 units of its flagship Isuzu brand, comprising 271 complete knock downs (CKD) and 110 fully built units. Toyota Kenya was second after selling 23 complete knockdown kits and 174 fully built units, totalling 197 units.
Others top dealers included DT Dobie, which sold 104 Nissan units, Simba Colt, which pushed 103 Mitsubishi units, and Tata at 62 units. CMC Motors sold 39 Land Rover, 38 Mercedes Benz units, 24 Scania units, 20 Hyundai (commercial) units and 19 Nissan Diesel units.
Fluctuating shilling
In June, GMEA sold 1,494 units, Toyota 1,470 units, Simba Colt 638 units, CMC 563 units, DT Dobie 912 units and Tata 367 units.
“For the past six months, the shilling has been fluctuating rapidly and this trend has been affecting us. But we are already seeing some element of stability and this gives us some assurance. We are also seeing interest rates beginning to come down. What this means is that we shall have more purchases because most of the customers we deal with depend on bank credit to finance their purchases,” said Simon Mwiti, National Sales Manager-Toyota Kenya.
While the affinity for second-hand cars remains high, dealers in the news cars market do not appear by this consumer behavior.
“Impact of second-hand cars is felt mostly in the passenger car segment where first-time car owners prefer used cars before they can graduate to the showrooms. But users of commercial vehicles cannot risk buying used cars, and still prefer new cars,” said Mwiti.
The top 5 best-selling car models in May this year was Isuzu’s double cabins (90), Isuzu single cab (45), Isuzu TFR 54 station wagon (36) units, Land Rover defender 110TD Station Wagon (31) and Isuzu FRR 33-Large Bus (30).
The leading car marker in terms of market share, in May, remained General Motors East Africa (GMEA) at 35.3 per cent, Toyota 18.16 per cent and DT Dobie 15.67 per cent. The other big hitter in the new cars market was CMC whose market share stood at 9.86 per cent and Tata at 6.64 per cent.
It is not only the new cars market that has been ravaged by high interest rates, a volatile exchange rate and high cost of living. The used cars market has been struggling too.
Slowdown
“We have been experiencing a slowdown as most of our customers, who mostly depend on credit facilities are kept off by the prevailing high interest rates,” said Victor Mwaniki, chief executive of Coast Bazaar Expo.
