The volume of vehicles sold last year plunged 30 per cent, with the industry selling about 13,535 vehicles compared with 19,523 units sold in 2015.
The December 2016 Hot Report compiled by General Motors East Africa shows all the major car dealers in the country experienced a sharp decline in sales last year, signalling suppressed consumption of luxury cars.
It was the first time in five years that car sales for the seven car dealers in the country declined, raising fear of an economic slowdown.
The report gives a record of sales by Crown, DT Dobie, General Motors East Africa, CMC, Simba Colt, Toyota, and Tata.
CMC, the local dealer of Ford, experienced the sharpest drop with a decline of 38 per cent in total sales.
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The festive month of December was the worst, with the industry recording sales of 925 units. The highest sales were registered in March when 1,379 vehicles were sold.
A total of 885 units were sold locally during the period under review, with Simba Colt leading the market with 27.91 per cent market share.
Another 334 units were exported, with Toyota registering the highest number of vehicles sold to the export market at 146 units.
General Motors East Africa accounted for the largest number of sales during the period under review, having sold 4,751 units compared with 6,516 units sold a year earlier.
This saw the car dealer's sales plunge by 27 per cent even as it remained with a 35 per cent market share.
In the second quarter of 2016, manufacturing experienced the slowest growth at 3.2 per cent in what the Kenya National Bureau of Statistics (KNBS) blamed on, among other factors, a decline in the assembly of motor vehicles during the review period.
Car sales were also at their lowest in the month of November, with all the main car dealers selling a total of 1,078 units - a unit more than the total sales recorded in January - according to industry reports.
Total year-to-date (YTD) industry sales for November last year stood at 12,610 units compared with 18,077 sold in the same period in 2015, resulting in a 30 per cent decline.
According to figures from the national statistician, in 2015 about 10,810 vehicles were assembled in the country, up from 9,51 pieces in 2014.
Car dealers have had to contend with intense competition from second-hand vehicles because of their low cost.