Kenya’s New Car Market Sees Demand Drop

The demand for new vehicles in Kenya has experienced a significant decline of 13.51 percent this year compared to the same period last year, based on the latest industry data.

New vehicle dealers have sold 4154 units during this review period, a decrease from 4803 units sold in the corresponding period last year.

The Kenya Motor Industry Association (KMI) has observed a slightly accelerated pace of sales drop compared to the previous year, reflecting a challenging trend in the market.

The three largest motor dealers, which collectively account for about 90% of new car sales volumes, have all reported a decrease in demand.

Leading the market, Isuzu East Africa experienced an 8.31 percent drop, selling 2008 units compared to 2190 units from the previous year. Despite the decline, Isuzu managed to increase its market share to 48.34 percent from 45.60 percent in the preceding year.

Meanwhile, CFAO, the dealer of Toyota, Mercedes, Volkswagen, and Hino following the merger of Toyota Kenya and DT Dobie, saw a sharper fall of 16.12 percent, selling 1332 units compared to 1588 units in the prior year.

CFAO’s market share decreased to 32.07 percent from 33.06 percent.

Simba Corp, which holds various franchises including Mitsubishi and Proton brands, experienced a slight increase in its market share to 10.13 percent from 9.60 percent.

These declines in demand for new cars are occurring against a backdrop of increased borrowing costs for households and businesses.

Banks are imposing interest rates as high as 25 percent for car financing, impacting the plans of potential buyers. The elevated cost of credit follows the Central Bank of Kenya’s monetary policy committee’s decision to raise its benchmark interest rate to 13 percent in response to recent inflationary pressures.

This economic environment has contributed to the general drop in demand for new vehicles as consumers and businesses reassess their purchasing decisions in light of higher borrowing costs.

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