Nairobi: Pent-up demand from 2017 deferrals drives up new car sales

Automakers in Kenya Wednesday turned in impressive month with the sale of 7,379 units in the seven months to July, helped by pent-up demand from 2017 deferrals.

Kenya Motor Industry Association (KMIA) which tracks auto sales in the country, expects the momentum to sustain through the reminder of the year, with other factors such as delivery of national police service tender and political stability to further contribute to the industry’s upswing which is expected to grow by 10.3 percent in 2018, with an estimated volume of 10,973 units.

Despite monthly sale volume hitting multiple record highs this year, KMIA is concerned that access to credit for SME’s will continue to be a challenge for most car manufacturers, mainly because of delays in the proposals to review interest rate capping, as well as sluggishness by government also affecting payment to suppliers.

Further growth is expected in the second half of the year owing to the impending review on age limit of old cars by the government – from the current 8 years to 5 years of car imports, according to industry observers.

“Last year was really a tough period for the industry, which declined by 23 percent, it could be better this year and beyond but certainly not to the levels seen in 2015,” said managing director of Toyota Kenya Arvinder Reel in a previous interview, who attributed the consistent growth in the last seven months to consumer confidence owing to increased spending in sports utility vehicles by middle-income earners.

The government, through the ministry of industrialization is developing a draft copy of Motor Vehicle Policy (MVP), in collaboration with auto manufacturers, auto vehicle makers, aims to boost local assembly of vehicles and shield local car manufacturing industry from unfair market competition while at the same time guaranteeing tariff-free to some vehicle parts being produced in the country.