New car sales drop 6% Y-o-Y in October on lower spending power

By Steve UMIDHA

New vehicles sales fell 6 percent in October from a year earlier to 9,093 total industry units, data from the Kenya Auto Industry Association (KMIA) shows.

This is 591 units less the industry sold in 10 months to October last year at 9,684 total vehicle sales.

KMIA said Monday that car sales have been hit by weak demand as financial institutions have tightened lending for vehicles.

As of November 19, 2024, the lending rate in Kenya is 16.91%. This is based on the Central Bank of Kenya’s (CBK) September 2024 CEOs Survey.

In response to the CBK’s decision to lower the benchmark interest rate, some banks have however, lowered their lending rates. For example, NCBA Bank Kenya lowered its lending rates to 16.91% for shilling-denominated loans and 11.09% for dollar-denominated loans.

The aforementioned has led to High cost of cars, with the cost of cars having increased, especially since the pandemic, eroded purchasing power which has had people’s purchasing power decreased, slowed down car importation as well as growing number of dealers shipping in cars at huge losses.