Kenya new car sales plunged by 14 per cent in 2020

New vehicle sales in Kenya dropped 14.6 percent last year, hit by a sluggish economy that was triggered by the coronavirus pandemic, the umbrella body for the industry said on Wednesday.

The industry sold 11,086 vehicles the whole of last year, down from 12,981 in the previous year, according to the figures released by Kenya Vehicle Manufacturers Association (KMIA).

Global carmakers such as Volkswagen have been investing in vehicle assembly in the East African nation in recent years, attracted by its long term economic growth prospects and its strategic location as a hub for the region.

But that momentum cooled as a result of the ongoing global pandemic that has seen the industry register inconsistent figures.

Before the pandemic vehicle manufacturers had, however, been investing in Kenya recent years, to take advantage of growing demand for newer, environmentally friendly vehicles.

Volkswagen for instance doubled its Kenyan production two years ago with other companies also announcing plans to start or restart assembly in Kenya including Peugeot and Volvo.

Isuzu also increased its local presence in 2016 by buying a 57.7 percent stake from General Motors in GM’s Kenyan franchise.

Those expansion plans by car manufacturers could pick up this year according to car expert Trevor Lumenya who reckons that dealers will likely invest in 2021 and beyond despite the looming general elections next year.

“From my conversations with some dealers, there is an obvious optimism and positive sentiments from most companies. Some companies have aligned budgets for such moves, “said Lumenya in a telephone interview.

Experts had predicted that the industry would perform poorly this year because of the pandemic but improving the business environment could now provide a glimpse of hope for car dealers this year.

Kenya’s private sector recorded a modest growth in December last year, with output rising at the slowest rate in six months, even though new orders quickened marginally.

The latest Stanbic Bank Kenya Purchasing Managers Index (PMI) Survey posted 51.4 during the month compared to 51.3 in November, signaling a retiring improvement in business conditions – with the expansion softer than those seen from July to October as the economy recovered from the COVID19-led downturn.

Prior to the surprise dip, Kenya’s private sector had recorded a fourth straight month of growth in October, with output and new orders rising solidly amid second phased re-opening of the economy.