August auto sales almost flat on slim inventories

By Steve UMIDHA

New vehicle sales were almost flat in August, pointing to a difficult period for auto dealers which was occasioned by extended electioneering period.

New industry data by the Kenya Motor Industry Association (KMIA) shows that auto players have only sold 8,752 total units between January and August this year, compared to 8,811 in a similar period last year – meaning the sector has sold 59 less units this year.

The condensed year – to – date total sales performance according to KMIA was as a result of the uncertainty surrounding the just ended August 9 general elections whose outcome saw former Deputy President William Ruto declared the country’s fifth President.

As a result, Kenyan investors and financial executives including those in the auto business, took a big sigh of relief two weeks ago after the Supreme Court upheld Ruto’s win, offering some hope and clarity after months of ambiguity which had hindered decision making among businesses.

The 7-bench judge led by Chief Justice Martha Koome unanimously dismissed seven petitions challenging Ruto’s victory after his closest competitor Azimio La Umoja – One Kenya Coalition Presidential candidate Raila Odinga challenged his win following alleged electoral malpractice.

Auto industry is among key sectors that is yet to fully recover from election jitters and other macroeconomic challenges like Covid-19 and the ongoing European war.

Liquidity concerns since the start of the year’s second quarter (April, May and June 2022) have seen several banks hold back loan requests to car buyers, which has been a key impediment in the sector’s growth.

“We had seen a reduced uptake in loan inquiries but that has changed almost immediately in the last two weeks since the court ruling, this tells you folks are eager to return to business as quickly as they can, we are expecting this demand to carry on for the remainder of the year,” commented the CEO of micro lender, Jijenge Credit limited.

Increased production of electric cars with digital technology as well as rise in digital automobile sales (via social media platforms), are expected to boost the sector’s performance, according to Dinesh Kotecha, the Group CEO of Simba Corporation, who is now optimistic of the last quarter of the year.

“The elections are behind us now, and we are seeing an improving customer engagement across our outlets, the next few months will be vital,” said Kotecha.

The months of September and December are expected to offer discounts for car dealers who will be eying the remainder of the months in 2022 to get sales across the line, in what promises better months ahead for car manufacturers.

For the larger parts of the year, cash circulation had been a major concern for the country’s private sector which is still whirling from the impacts of Covid-19 and Russia-Ukraine conflict which broke out in February.

The country’s annual inflation rate has been rising on account of many macroeconomic factors including the Covid-19 pandemic but has intensified due to the ongoing global war between Russia and Ukraine.

The ensuing effect of rising inflation – which is a general increase in the prices of goods and services in an economy, has led to a slow growth in consumer spending among Kenyans, with most households today opting for cheaper alternatives to the products they were accustomed to.