New car sales end 2021 on an electric high, but pitfalls likely in 2022

By Steve Umidha

Domestic car dealers ended 2021 on an electric high, selling an impressive 14, 250 new car sales in 12 months to December despite a tumultuous year occasioned by Covid-19, new industry data has shown.

Figures by the Kenya Motor Industry Association (KMI), a lobbyist for the formal motor sector, show that a total of 1,500 new vehicles were sold in December alone – the highest sale in a single month.

The December sales was also the fastest recovery period seen in the market which was attributed to the rising consumer confidence amid easing mobility restrictions following curfew seizure in October, it was also the month that is ordinarily a ‘merry making’ period owing to Christmas festivities.

The latest KMIA data further shows that the industry sold 3, 278 more new vehicles last year compared to 10, 972 total units sold by the industry for the entire year 2020.

Last December’s sales was a culmination of a remarkable last three months of 2021 for car dealers in the industry with KMI data indicating that 12, 750 new vehicles were sold between January and November, compared to 11,222 total units the industry had managed in 10 months to October.

Higher spending from buyers and ease of the economic disruption of coronavirus restrictions as well as cheaper financing options by the banks were all mentioned as reasons for last year’s growth.

That growth, is however not expected to sustain this year, according to Toyota Kenya Managing Director, Arvinder Singh Reel who yesterday listed the volatile exchange rates, looming general elections as well as oversea logistics challenges as some of the factors that could see players register pent up figures this year.

“We could see possibly similar numbers as last year as we expect a lot of challenges this year which may also be affected by global prices in crude oil and the pending automobile policy still at the ministry of transport,” expressed Mr Reel in a telephone interview Thursday.

Dinesh Kotecha – the Group chief executive of Simba Corporation, the manufacturer of Mahindra brands, however, believes that this year’s figures could go lower than what the market managed in 2021.

With the number of infrastructure projects coming to their tail end owing to the looming general elections, he believes that car dealers will likely see a reduction in government contracts as the new administration takes office after the August national polls.

“I do not expect a busy year because of those challenges and we could go lower than what we did last year as an industry,” reiterated Kotecha – who is also betting big on the implementation of the pending automotive policy.

Kenya has been working on a framework to support the assembly of affordable passenger vehicles with stakeholder consultations believed to be in its final stages for the adoption of a comprehensive policy and administrative reforms to fully entrench local assembly of motor vehicles and motorcycles.

The Draft National Automotive Policy in consultation with Kenya vehicle manufacturers and auto vehicle companies was expected to be ready by now and will eventually pave the way for the ban on importation of second-hand vehicles. It is also meant to shield local vehicle manufacturers from what new vehicle dealers believe is unfair market competition brought by importers of second-hand vehicles.