Kenya’s March auto sales hit a new high

New vehicle sales raced back to positive territory after a year slump, with all major players posting impressive double-digit gains in the month of March, helping the industry sell 63 per cent more vehicles.

Isuzu East Africa, Toyota Kenya, Nissan and Mitsubishi brands all posted impressive growth in unit sales especially on commercial vehicle class in a market that was adversely impacted by the coronavirus pandemic.

According to the latest industry data by Kenya Motor Industry Association (KMIA) shows that car dealers sold a remarkable 2,836 units in the month under review compared to 1,738 total units the industry sold a month earlier – the best periodic growth seen in over a year since the pandemic struck.

Last year saw car makers record reduced sales units as buyers and governments (both national and Counties) shielded away from making new investments in vehicle purchases.

The Managing Director of Toyota Kenya Arvinder Reel in a telephone interview attributed the overall performance on the ongoing roads constructions particularly the $550m (£410m) Expressway project set to change the city’s skyline and ease traffic flows in and out of the centre of East Africa’s main commercial hub.

The government says the unique highway is an essential infrastructure project that will spur modernization.

Motorists using the Nairobi Expressway will be required to pay a fee of between Sh100 and Sh1, 550, depending on the size of the car and distance travelled, but the charges will fluctuate to cushion the Chinese operator, China Road and Bridge Construction (CRBC) from exchange rate losses.

“I would attribute this growth to the ongoing construction of Expressway in which most trucks are in use for the project. Also we have seen those clients who were holding back purchases, now knocking on our doors,” said Mr. Arvinder.

Analysts tracking the industry, however, yesterday held out hope as the economy is poised for a turnaround, but cautioned about a slower recovery.

“This was expected and the mood has changed among Kenyans with disposable income despite the majority still reeling from the impact of the pandemic, we should expect a continued growth going forward,” said Trevor Lumenya, a vehicle specialist, adding that “The market could have done better were it not for the ongoing pandemic.”

The sector’s growth comes on the back of a worrying inflation rate which rose for the sixth straight month to 5.90 per cent in March from 5.78 per cent in the previous month.

It was the highest inflation rate since last April, which was mainly pushed up by transport prices seen in February in a month that saw petrol prices shoot 10.34 per cent, diesel 5.83 per cent while that of kerosene stood at 2.47 per cent amid a recent hike in fuel prices which was blamed on the rising cost of importing oil products.

New vehicle market is further poised for growth as the government is racing against the 2026 deadline – a period it aims to stop importing second hand. This is meant to grow the local car assembly industry.

The National Treasury estimates that second hand cars make up more than 85 per cent of the imported fully built units (FBUs) in Kenya – a reality that eats into profit margins for car assemblers and showroom dealers.

The government, through the Ministry of Industrialization, drafted the National Automotive Policy that also seeks to spur growth in local car assembly as it prescribes clear measures to promote utilization of locally manufactured products, local content, sub-contracting, innovation, research and development, capacity and skills development and training, and technology transfer.