Virus drives car dealers into losses
By Benard Sanga | July 3rd 2020
Car traders in Mombasa have been hit hard by the coronavirus pandemic which has led to fewer cars being sold since March this year.
The shrinking sales have sparked job losses and affected the logistics sector, which is heavily dependent on the local auto industry.
The auto industry in Mombasa comes in two ways: One involves vehicles imported through the Mombasa Port and transported inland for sale; the other involves second hand vehicles, including imported ones, sold in the showrooms across Mombasa island.
Both platforms employ thousands of workers. Since March, this trade has been devastated by the disruption of the supply chain with most cars being sourced from China.
Infections reported at the port which have occasioned movement restrictions have also exacerbated the gloomy scenario. At the same time, National Transport and Safety Authority (NTSA) suspended its operations at the Coast in May after several of its outlets in Mombasa recorded Covid-19 infections.
Thus, many that were due for registration are still in stores.
Experts in the auto sector project that vehicle sales could pick up in November and December if the government loosens travel restrictions imposed on Mombasa and Nairobi to deter the spread of Covid-19.
Yesterday, car dealers in Mombasa said average sales of second-hand vehicles have dropped by at least five per cent since March when the State imposed the travel restrictions.
According to the Car Importers Association of Kenya (CIAK), most units that were brought in March and April are still unsold due to the Covid-19 disruptions. “At the moment, units cleared through the port have dropped by 70 per cent and average monthly sales have gone down by five percent,” said CIAK chair Peter Otieno.
He noted that the drop is attributed to the cessation of movement imposed on Mombasa and Nairobi counties, an economic slump, and strict protocols to contain the virus.
Mr Otieno projected that the sector will start to pick in August and stabilise in November and December if travel restrictions are lifted on July 6.
He said currently, 9,000 to 10,000 units are cleared at the port in a month, which is a drop due to the slowdown of the economy.
“The biggest problem is that our clients from Nairobi cannot come down to Mombasa. Drivers cannot also take the units to them because of travel restriction,” Otieno said.
CIAK noted in a statement that in 2018, the number of cars imported through Mombasa hit 24,123 per month. Before Covid-19 disruptions, the volumes had gone up by 15 per cent.
It also revealed that the government collected Sh162 billion from the sector in terms of taxes.
At least 1,200 custom agents were employed to collect the levies. Currently, however, several clearing and forwarding firms have closed shop.
“At least 34 per cent of all second-hand cars sold at the Coast are bought by people aged between 24 years and 54 years. Most have lost jobs because of the virus,” Otieno said. He said the collapse of the tourism sector has also affected the travel agency business.
In May, traders in East Africa successfully lobbied the government to classify car importers as traders dealing in essential goods. This was done to open the port of Mombasa for them.
The importers were allowed to hire drivers to transport vehicles stuck at the port to various destinations in the region. This helped decongest the port.
The Northern Corridor Transit and Transport Coordination Authority however decreed that such drivers must obtain certificates showing they are free of the coronavirus.
Covid 19 Time Series
Farmers suffer as food imports dominate Kenyan dinner tables
- Why China-US rivalry is not about to end
By XN Iraki
- VAT exemption on exported services not good proposal
- Kenyans to pay higher bills for electricity
- EABL hikes prices of popular brands but Keg lovers spared
MONEY & MARKET
- Readjusting your spending habits to get through the pandemic
By Paul Kariuki