Auto retail sales slightly increase in April on improved economy

By Steve Umidha

Kenya’s automobile retail sales increased by just 6 percent percent in April with total transactions for the month jumping to 1,175 vehicles compared to 1,106 units the industry sold in a similar period last year.

The latest data by the Kenya Motor Industry Association (KMI), a lobbyist for the formal motor sector now puts the industry’s total vehicle sales at 4,378 vehicles since January – meaning the sector has sold 436 more units between January and April compared with 3,942 units it managed in a similar period last year.

That growth was particularly impressive in the commercial segment of the industry with new vehicle registrations jumping by 14 percent in February for instance, to record total sales of 1,984 units compared to 1,738 cars the sector sold in a similar month last year.

KMIA attributed that rise to improved economic activities since the lifting of all movement restrictions by the government in July last year – a key decision that largely backed the improved performances seen in the first four months of the year, which is also a typically slow period for auto purchases.

The data further shows that overall sales in the months under review bettered last year’s performance owing to restrictions that were still in force at the time.

Even more impressive, some players in the sector who spoke previously believe May, June and perhaps July may record striking numbers before that momentum cools again in August and September because of the upcoming August general elections – a period that is synonymous with slow economic activities.

Dinesh Kotecha – the Group chief executive of Simba Corporation, the manufacturer of Mahindra brands, in a telephone interview, projects that this year’s figures could go lower than what the market managed in 2021.

“I do not expect a busy year because of those challenges and we could go lower than what we did last year as an industry,” reiterated Kotecha – who is also betting big on the implementation of the pending automotive policy.

KMIA data shows that domestic car dealers ended 2021 on an electric high, selling an impressive 14, 250 new car sales in 12 months to December despite a tumultuous year occasioned by Covid-19.

Higher spending from buyers and ease of the economic disruption of coronavirus restrictions as well as cheaper financing options by the banks were all mentioned as reasons for last year’s growth.

Many studies have shown that the economy is a major factor that affects how people vote – specifically in the presidential election which is slated for Tuesday August 9.

Strong economic growth typically translates to high job creation, stronger wage growth, better financial market performance and high corporate profits.

Industry trends also show that March and September are the peak months for sales of new cars, often through part-exchange deals. Car dealers will have lots of used cars to sell, which puts a buyer in a strong position when negotiating.

Dealers are also often keen to clear out used cars in July and early August in readiness for new models. But volatile exchange rates, looming general elections as well as oversea logistics challenges are some of the factors that could see players register pent up figures this year.