Motor industry registers drop as cash strapped businesses, households stay away

Boda boda operators wait for giveaways and fuel happy hour session during the launch of Galana energy service station at Kithini market in Machakos County on December 3, 2024. [John Muia, Standard] The motor vehicle industry registered a major decline last year as many households and businesses froze acquisitions owing to a mix of factors. These included tough economic conditions, refusal by banks to lend to Kenyans and high taxes that affected both spending power for many and drove up vehicle costs. The total number of newly registered vehicles dropped 21.4 per cent, according to the Economic Survey 2025 launched on Tuesday, to 93,646 units last year from 119,205 units in 2023. The number of newly registered vehicles last year was the lowest since 2017. The number of motorcycles registered also continued a multi-year decline and hit the lowest in 16 years, dropping to 72,868 in 2024 from a peak of 291,553 in 2021, after which it registered a significant decline. Last year's was lowest since 2008 when the government gave the sector incentives as it sought to deal with youth unemployment. Over 2024, hard hit were sales of vehicles used by businesses across different industries, including lorries and trucks, where newly registered units dropped 60 per cent - from 13,635 in 2023 to 5,456 in 2024, while trailers followed a similar trend, declining by 66.7 per cent to 2,123 in 2024. The survey data also showed that newly registered panel vans and pick-ups dropped by 54.6 per cent to 5,879 in 2024 from 12,957 in 2023. Wheeled tractors, used mostly in agriculture dropped 67.5 per cent while buses and coaches, largely used by the matatu industry dropped 53.5 per cent. Saloon cars, mostly used by private motorists, dropped 15.9 per cent. The outlier segment was station wagons, which grew four per cent, an indicator cash strapped Kenyans and businesses were turning to such vehicles as Toyota Proboxes and Nissan for both commercial and private use. A mix of factors contributed to the decline in the number of vehicles that individuals and businesses bought last year, including a reduction in disposable income for many salaried Kenyans as more deductions kicked in and reduced their spending power. Businesses have also been cash-strapped on account of a tough operating environment that includes continued non-payment of pending bills by the government as well sluggish demand for products. Banks also slowed down lending to households and businesses and instead preferred to lend to the government through Treasury Bills and Bonds. "Commercial banks and non-bank financial institutions' credit to the private sector declined by 6.6 per cent to Sh2.67 trillion as at December 2024," said the Survey, which was in comparison to Sh2.86 trillion in 2023. "Credit advanced to the public sector during the review period grew by 2.6 per cent to Sh2.39 trillion as at December 2024." The government also increased duty on imported cars to 35 per cent from 25 per cent in July 2023, which has also had the effect of pushing vehicles out of reach for Kenyans. Motorcycles, whose sales have boomed for the better part of the last decade, dropped to the lowest since 2008 when Kenyans bought 52,116 motorcycles and three-wheelers (tuktuks). Analysts note other than the financial difficulties Kenyans are experiencing, the industry could also be nearing saturation. According to the survey, "the total number of newly registered motor and autocycles, and three wheelers declined by 4.7 per cent from 76,451 in 2023 to 72,868 in 2024". The number of motorcycles on Kenyan roads has grown rapidly since President Mwai Kibaki's administration waived excise duty on imported two-wheelers below 250cc (cubic capacity) in 2009. The move made motorcycles relatively affordable, and young unemployed Kenyans started creating their own employment in the transport sector. This saw the number of motorcycles that Kenyans bought annually grow from 52,000 in 2008 to 117,266 in 2010. The number of newly registered boda bodas peaked in 2021 at 291,553. After that, the registrations declined to 135,514 in 2022 and 76,541 in 2023. Motorcycles have since 2009 become key in Kenya's public transport, ferrying passengers in areas that are underserved by public service vehicles, but also those trying to beat traffic in busy urban areas. They have also been key in enabling e-commerce, offering parcel delivery services. The flipside has been rise in instances they are being used to commit different crimes.

Motor industry registers drop as cash strapped businesses, households stay away

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