The year that was in the automotive industry - Beaking Kenya News

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Wednesday, 30 December 2020

The year that was in the automotive industry

 

The country's automotive industry recorded reduced activities this year as Covid-19 took a toll on the economy.

The pandemic which has ravaged different sectors saw households hit hard with millions of Kenyans loosing jobs, amid a reduced purchasing power by individuals who either have had to survive on pay cuts or low turnover on businesses. 

New vehicle registrations dipped 33 per cent to 52,999 in the nine months to September, compared to 79,078 in a similar period last year, data by the Kenya National Bureau of Statistics (KNBS) shows.

The reduced demand for vehicles forced dealers in used cars to cut prices as the economy continued to dwindle.

“Business was really bad this year as most of our customers now had tighter budgets while others lost their sources of income, we hope for a better 2021,” said Maxwell Wanyama who sells second-hard imported cars.

A report released by Trends and Insights for Africa – Tifa in partnership with Cheki indicates that many Kenyans lost their source of income and were not able to service bank loans.

As a result, sale of cars seized by banks could have increased supply in the market, further putting downward pressure on prices.

According to the report, the Kenya Used Vehicle-KUV Price Index growth sustained a downward trend from an index of 102.81 in February compared to an index of 67.87 in March based on fixed base index.

The price index stood at 110.09 in April with a growth of 42.22 from March.

The Index maintained a slight change in July which stood at 120.54.

However, a price increase was observed between July and August with a growth of 29.11 and stood at 149.25.

A price decrease was observed between August and September from a price index of 149.25 to 136.42.

In addition to a downward trend in prices, there was a downward trend in the number of listings of vehicles during the month of March 2020 being attributed to the effects of Covid-19 pandemic.

The report further reveals that Toyota, Nissan and Subaru models, 4 wheel drives and SUVs tops the list of used vehicle body type.

Kenyans who own luxury cars were also forced off their high-end cars in the wake of Covid-19 economic hardships, the report also shows.

Findings in the report show that 34.4 per cent of the 151,000 cars listed for sale on Cheki , a car selling website, were sports utility vehicles (SUVs) and four-wheel drive models that are associated with the rich and middle class Kenyans.

The models include Toyota Prado, Toyota Harrier, Vanguard, Nissan X-Trail and the Subaru Forester that have high maintenance and fuel costs.

The rush to dispose of the fuel-guzzling models came in a period when financial burden engulfed many people amid the economic fallout.

The Car Importers Association of  Kenya however believes Kenyans still had disposable income to spend on cars despite the pandemics. 

According to CIAK Mombasa chapter chairman Mustafa Ramadhan, the various lock-down restrictions are what reduced vehicle purchases especially imported used units that land at the Port of Mombasa.

"I am optimistic about 2021 as various countries have eased their movement restrictions therefore we expect to get more cars into the country," said Ramadhan.

Sales of new luxury cars however are registering a mixed performance as they rose marginally in the nine months ended September.

Data from the Kenya Motor Industry Association (KMI) shows that orders for the cars, whose prices can top the Sh30 million mark, rose to 113 units in the review period from 112 units a year earlier.

BMW had the best performance as its unit sales more than doubled to 20 from eight.

The German car franchise is now held by Inchcape Kenya which acquired it from rival Simba Corporation last year.

Mercedes was second, raising its orders to 48 from 38.

All the other luxury car brands registered a dip in sales, cancelling out the performance by BMW and Mercedes.

Motor vehicle dealer Isuzu East Africa raised its market share to a  high of 40.1 per cent in the nine months ended September as its sales held up relatively better compared to its rivals.

Isuzu’s unit sales in the review period stood at 3067, according to data from the Kenya Motor Industry Association (KMI).

Toyota Kenya on the other hand had sales of 1,796 which gave it a 23.5 per cent market share in the review period.

Its sales the year before stood at 2,642 and gave it a 26.2 per cent market share.

With regards to future trends, Maggie Ireri CEO TIFA said the KUV Price Index has started declining from September 2020 and is expected to continue until January 2021.

She said this is normal as the traders await the year to end and the cars to get older.

Kenya's car imports are likely to take two years to recover from the negative effects of the Covid-19 pandemic, according to CIA.

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