Boom for new car dealers as sales near record high

New motor vehicle dealers are set to end the year on a high note as sales in the 11 months to November surpassed units moved in the whole of last year.

Data from the Kenya Motor Industry Association (KMI) shows that new vehicle dealers sold 18,509 units in the period, beating 2014’s full-year sales of 17,616 units.

With the dealers selling an average of 1,600 units per month, this year’s sales are tipped to set a new record possibly topping 20,000 units for the first time in more than two decades.

The surge in demand is mainly driven by buyers of commercial vehicles. Sellers of buses and trucks such as General Motors East Africa (GMEA) and Simba Corporation are the major beneficiaries of the sales boom.

CMC Holdings also benefitted from strong sales of its Ford pick-ups and utility vehicles. The dealer sold substantial units of these to the Police over the past one year.

“There is high demand for commercial vehicles from the private sector and public infrastructure works,” said Dinesh Kotecha, a director of Simba Corporation.

CMC, whose brands include Ford and Suzuki, recorded the fastest sales growth among the major new vehicle dealers.

Their sales surged 35.7 per cent to 1,664 units in the period under review compared to the first 11 months last year.

This pushed up its market share to 8.9 per cent from 7.6 per cent. GMEA, which sells Chevrolet cars and Isuzu trucks and buses, saw its sales rise by a third to 6,061 units.

This pushed its market share rise to 32.7 per cent from 28.4 per cent, continuing its streak as the country’s largest new vehicle dealer.

Simba Corporation, whose brands include BMW cars and Mitsubishi trucks, posted a 16.9 per cent growth in sales to 3,269 units-- keeping its market share steady at 17.6 per cent.

READ: Simba Corp targets used car dealers with Sh1m new Renault

While most dealers recorded significant sales increase, Toyota Kenya and DT Dobie bucked the trend with sales declines that hurt their market share.

Toyota, which also sells Hino trucks and buses, posted an 11.4 per cent drop in sales to 3,872 units. This pulled down its market share to 20.9 per cent from 27.4 per cent.

Toyota last year benefited from tenders that saw it supply the Police Service more than 1,000 vehicles, with its latest performance seen reflecting the absence of the one-off lucrative contract.

The sales of DT Dobie, whose brands include Mercedes and Jeep, declined by a quarter to 844 units in what saw its market share drop to 4.5 per cent from 7.1 per cent.

The dealer’s performance was affected by the loss of its Nissan franchise to rival Crown Motors, which sold 568 units of the newly acquired brand in the review period.

DT Dobie is betting on its recent acquisition of the Greatwall and Volkswagen dealerships to grow sales in the coming years.

While analysts had expressed fears of a slowdown in sales this quarter due to the recent jump in interest rates, aggressive discounting by some dealers is expected to sustain the high demand through year-end.

CMC Holdings, for instance, is offering a discount of up to Sh1.5 million on some of its Volkswagen cars in a clearance sale after selling the franchise to DT Dobie.

Other dealers have also reduced the price of some of their models ahead of the introduction of newer versions.