New luxury car sales drop 33 per cent on high cost of loans
Jaguar’s F-Pace: Jaguar sold 17 cars, up from six a year before. PHOTO | FILE
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Sales of high-end cars such as Mercedes and BMW stood at 132 units in the first half of the year compared to 197 units a year earlier.
Sales of new luxury cars in Kenya dropped 32.9 per cent in the first half of the year, mirroring the overall downturn in the new vehicles market that has been hit by an economic slowdown.
Data from the Kenya Motor Industry Association (KMI) shows that sales of high-end cars such as Mercedes and BMW stood at 132 units in the period compared to 197 units a year earlier.
Total sales in the new vehicle market dropped 29.1 per cent to 7,154 units in the same period, with luxury car dealers taking a harder hit as wealthy individuals and private firms cut orders.
“A mix of negative economic factors has hit demand for luxury cars,” said a dealer who did not wish to be named.
“The economy has been affected by reduced government spending and interest rates are high,” he said, adding that banks charged rates of up to 20 per cent this half year compared to lows of 13 per cent in the previous period.
He said luxury cars have also become more expensive on the introduction of excise duty at the flat rate of Sh150,000 last year, with the levy recently enhanced to 20 per cent of a vehicle’s value.
The increase in the levy has seen the price of the more expensive models rise by millions of shillings, with the excise tax on a Sh20 million car, for instance, increasing by Sh2 million.
All the luxury car brands recorded a drop in sales except Jaguar whose sales stood at 17 units in the review period, rising from six the year before.
“We did not lower our prices. We have worked hard to build our brand appeal,” Sanjiv Shah, the chief executive of Jaguar dealer RMA Kenya told Business Daily recently.
The dealer recently launched its first Jaguar SUV dubbed the F-Pace whose retail price starts from Sh9 million.
Sales of Land Rover models –which were split between RMA and former franchise holder CMC Holdings— dropped to 36 units from 42 units. Models in the Land Rover line-up include Discovery and Range Rovers.
Most of the Land Rover sales came from RMA which in 2013 took over the Jaguar Land Rover franchise from CMC Holdings that is clearing its stocks.
RMA sold its first Range Rover Autobiography, arguably the most expensive car in local showrooms, in the first quarter.
The price of the highly customisable car, featuring massage seats and a champagne cooler, starts from Sh30 million and can top the Sh40 million mark depending on extra options.
Sales of Mercedes, by DT Dobie, dropped the most to 32 units from 53 units. The dealer recently deepened its presence in the luxury SUV segment with the introduction of six new Mercedes models including GLC and GLE.
DT Dobie previously relied heavily on Mercedes sedans including the S-Class and E-Class that are popular with executives and government officials.
Sales of luxury Jeep SUVs, also by DT Dobie, recorded the second largest decline to eight units from 28 units. Sales of BMWs, by Bavaria Auto, fell to nine units from 21 units. Porsche, which started operations in May 2014, saw its sales drop to 30 units from 47 units.
Competition in the luxury car segment has increased with the entry of more players, with rivals betting on new models, competitive pricing and enhanced service and warranties to grow sales among rich and middle class clients.
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