× Business BUSINESS MOTORING SHIPPING & LOGISTICS DR PESA FINANCIAL STANDARD Digital News Videos Health & Science Lifestyle Opinion Education Columnists Moi Cabinets Arts & Culture Fact Check Podcasts E-Paper Lifestyle & Entertainment Nairobian Entertainment Eve Woman Travelog TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified Jobs Games Crosswords Sudoku The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS
×

Car dealers take a hit as sales drop on tough economic conditions

BUSINESS
By Macharia Kamau | November 3rd 2016
By Macharia Kamau | November 3rd 2016
BUSINESS
Dealers in new motor vehicles reported a combined 31 per cent drop in sales, selling 10,368 units in the period between January and September this year compared to 15,101 units moved over a similar period last year. PHOTO: COURTESY

The number of new vehicles sold in the country declined sharply in the first nine months of the year due to a harsh economic environment.

Dealers in new motor vehicles reported a combined 31 per cent drop in sales, selling 10,368 units in the period between January and September this year compared to 15,101 units moved over a similar period last year.

Kenya Motor Industry Association forecasts sales for the fourth quarter of this year to stand at 3,632 units, bringing the total number of new vehicles sold in 2016 to just about 14,000. This would translate to about 30 per cent reduction in sales when put in comparison to the 19,524 new vehicles sold last year.

It is the first time that growth in sale of motor vehicles has slowed down over the last six years. The industry has steadily grown since 2011 when it sold 11,050 new vehicles to last year when it sold over 19,000.

General Motors East Africa (GMEA) Managing Director Rita Kavashe (pictured) said a mix of factors has contributed to decline in sales, including a harsh operating environment that has seen corporates cut down on spending.

LIMITED BORROWING

“The market has not been doing very well this year. Few market segments are buying and sales have mostly been driven by SMEs buying for their businesses as well as individuals buying for personal use. This is a good market, but their purchases are usually under Sh4 million,” she said.

A more recent development has been the capping of interest rates. Though expected to spur borrowing following the availability of cheap credit, lenders have introduced measures that might further limit access to credit.

“Many banks are still figuring out how to respond to the amendment in the Banking Act capping interest rates. While it was expected to increase lending, some banks have introduced new dynamics like processing fees and other requirements that have in a way limited borrowing,” said Ms Kavashe.

She added that major customers for the motor industry have been hit by failure by the State to pay for services and products at both national and county levels.

In the course of this year, GMEA has had the largest market share at 34 per cent, followed Toyota (19 per cent) and Simba Colt (16.5 per cent).

Share this story
Construction of Sh850m data centre in Nairobi begins
A group of Kenyan investors under the trade name Icolo.io is building a Sh850 million data centre in Nairobi. The construction commenced last month and is set to be completed by the end of 2017. The data centre will be situated on land leased from Catholic University of Eastern Africa, and will span 27,000 square feet.
CS Najib Balala summoned over stalled project
There have been reports of cut-throat competition between agencies under the Ministry of Tourism.
.
RECOMMENDED NEWS
Feedback