Industry forecasts drop in motorcycle sales

By Macharia Kamau

Local firms marketing motorcycles expects a decline in sales this year. This will reverse the boom period witnessed between 2008 and last year, when the sale of new units grew by more than 40 per cent per year. The motorcycle industry sold 140 000 new units in 2011 compared to 50 000 units in 2008. The sales were driven by a shift in public transport, especially in rural areas, where the motorcycles offer alternative means of transport.

The expected drop has been attributed to high lending rates by financial institutions. This has deterred low income earners from taking up credit from commercial banks as well as high cost of living that has seen many people cut down on spending.

Firms also say next year’s elections may have seen many customers – both individual and corporate – hold back on spending and investments. This could also result in motorcycle selling fewer units this year.

“The industry has seen tremendous growth, from about from about 50 000 units in 2008 to about 140 000 units last year. This year, the growth might slow down by 25 per cent due to a number of factors including high interest rates and inflation which has translated to a drop in individual discretionary income,” said Vijay Gidoomal group managing director Car & General. Wangari Maina, team leader sales administration and marketing Yamaha department at Toyota Kenya said there are more factors, including new motorcycle number plate registration process with the Kenya Revenue Authority that slows down buyers.

“Going by what we have seen, I would say that sales might decline by between five and ten per cent, that is if they do not remain at last year’s levels,”

“Interest rates having been high in the first half of this year and this saw many people shy away from taking credit. An important segment of the motorcycle target market is the low-income earner. If this segment is handicapped in that they cannot take loans then the sales are also handicapped,” she said in an interview.

Other challenges including customers getting jittery in the run up to elections might also see decline in sales. “This is an election year and people tend to hold back a lot... it is however temporally and we expect normal situation after the elections,”

Car & General however said the decline expected in 2012 is only temporally and that there is huge potential for the sale of motorcycles in Kenya and the region in the coming years.

New growth areas include the corporate segment, where firms and courier companies  are increasingly employing motorcyclists  to run petty errands. They are expected to be essential to the sales growth of  motorcycles and spare parts.

Gidoomal said the firm is positioned to tap into the corporate market segment that is sensitive and conscious to quality across the country including offering after sales services.“ Apart from boda boda, which is the motorcycle taxi business, we expect the corporate sector and also bikes for personal use,” he said.

Motorcycles grew significantly over the last four to five years due to affordability.

This has been aided by increase in the number of motorcycles imported from non-traditional motorcycle markets like China. Maina noted that while cheaper options may have increased competition in the industry, they presented options to different market segments. She added  that Yamaha was now looking at buyers wiling to upgrade their motorbikes.