The result of reduced economic activity in a market that has been beset by tighter access to credit and political uncertainty arising from prolonged electioneering.
Nearly all the dealers including Isuzu, Toyota Kenya and Simba Corporation – which sells BMW cars and Mitsubishi trucks among other brands — recorded reduced orders.
The lower forecast will place the industry’s sales close to levels last seen in 2009 when the country was still reeling from the aftershocks of the 2008 post-election violence and the global financial crisis.
New motor vehicle sales have plummeted yet again this year, setting the industry on the path to closing 2017 with totals sales of about 11,000 units -- the lowest in eight years.
Dealers said the decline is the result of reduced economic activity in a market that has been beset by tighter access to credit and political uncertainty arising from prolonged electioneering.
Total sales had hit 10,121 units in the 11 months through November, according to data from the Kenya Motor Industry Association (KMI), which indicates that monthly orders stood at an average of 844 in the year.
This means that full-year sales could be just shy of 11,000 units, a 20 per cent decline from the 13,869 vehicles sold in 2016 and which was also a 30.5 per cent drop from peak orders of 19,966 units the previous year.
KMI chairperson Rita Kavashe, who is also the chief executive of Isuzu East Africa, recently told the Business Daily that the industry expected to close the year with sales of 10,700 units.
“Industry sales have been affected by the political uncertainty and the capping of interest rates that has particularly made it difficult for SMEs to get financing,” she said.
Nearly all the dealers including Isuzu, Toyota Kenya and Simba Corporation – which sells BMW cars and Mitsubishi trucks among other brands — recorded reduced orders.
The lower forecast will place the industry’s sales close to levels last seen in 2009 when the country was still reeling from the aftershocks of the 2008 post-election violence and the global financial crisis.
Market leader Isuzu, which sells its namesake commercial vehicles and Chevrolet cars, saw its sales drop 20.7 per cent in the 11-month period to 3,543 units.
Its top rival Toyota also recorded a sales decline of 11 per cent across its Hino commercial vehicles, namesake cars and pick-up brands.
The slump also affected luxury car dealers such as Porsche Centre Nairobi and RMA Kenya, which trades in Jaguar Land Rover models.
Most new vehicle purchases are financed by banks, with the credit crunch directly hurting sales in the industry.
Banks have responded to the capping of interest rates by lending to the government and blue-chip firms, locking out a large number of prospective individual and SME borrowers.
The lenders say the thinner lending margins in the current environment cannot accommodate riskier borrowers, a move that has led to a major credit slowdown.
Central Bank of Kenya (CBK) statistics show that growth of private sector lending stood at 1.6 per cent in August after months of steady decline, with agriculture, manufacturing, trade and mining industries recording significant reduction in credit access.
The run-up to the August general election also led to suspension of vehicle purchases among other capital investment decisions, with the uncertainty extended by the nullification of the presidential results and orders for a new poll.
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Note: The results are not exact but very close to the actual.
