Inflation cools off Kenya’s New car sales to September

By Staff Writer

The easing of supply chain bottlenecks saw car makers increase their sales volumes by a steady 1,116 units last month, bringing to a total of 9,868 the number of new vehicles the industry has sold between January and September 2022.

This by contrast represents a difference of just 176 more units local car dealers specializing in the sale of brand-new vehicles sold in a similar period last year which stood at 10,044 total number of vehicles sold.

Latest industry data by the Kenya Motor Industry Association (KMIA) also shows the super-rich bought fewer luxury cars than they did last September is what trends tie to the high inflationary pressures seen in the last months.

The KMIA data shows that the sale of high-end cars dropped significantly during the month under review with just a total of 197 units of Mercedes, BMW and Jaguar brands sold in that month compared to a collective total of 208 units for the three brands sold last September.

While the monthly total sales returned an impressive outcome, year – on – year (Y/Y) total sales performance dip 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.

Typically, the months of September and December tend to see car manufactures extend discounts to get sales across the line, but with the Central Bank of Kenya aggressively hiking interest rates recently to fight inflation, consumers could in the coming months find the cost of financing a new car suddenly a lot higher than it was early in the year.

In return, that could cut the demand and add new pressure to the auto industry, which had been struggling with depleted inventories during the pandemic even before the European war broke in February.

The country’s annual inflation accelerated for the seventh consecutive month to 9.2 percent in September, above market forecasts of 8.6 percent and the ceiling of the Central bank’s target range of 2.5 percent to 7.5 percent.

To tame those concerns, the Central Bank of Kenya (CBK) raised the key lending rate by 75 basis points to 8.25 percent, matching the Federal Reserve hike two weeks ago as central banks struggle to tame inflation.

Last month also marked a forward-looking economy with the services sector rebounding in September for the first time since March, as companies stepped up hiring on stronger growth orders.

It was a sixth-month high for the country’s private businesses, according to data by the Stanbic Bank Kenya Purchasing Managers Index (PMI) Survey – which measures the change in business activity such as income or chargeable hours worked, posting 51.7 during the month, up sharply from 44.2 in August and above the 50.0 no-change mark for the first time since March.

The reading signaled a renewed and modest improvement in overall business conditions, with the end of the elections cited by survey panelists as being a key factor in driving that growth.