Boda boda operators lift motorcycle sales by a third

Motorcycle dealers’ unit sales rose by a third last year, marking a major recovery for the industry that slowed down significantly in 2012.

Statistics from the Kenya National Bureau of Statistics shows that 125,058 motorcycles were sold last year compared to 93,970 units the previous year. This put the auto industry on path to match the 140,215 units it sold in 2011 — the peak year.

This has benefited dealers including Car & General, Yamaha Kenya, Honda Motorcycle Kenya and small-scale outlets dealing in multiple brands.

Sales of motorcycles have grown more than seven-fold over the past decade, helped by the entry of cheaper Asian brands and increased demand from the public transport sector. This has seen their sales overtake those of all other autos including saloon cars and buses.

This growth has attracted more investors who are setting up local assembly plants to gain pricing advantage in the competitive market.

C&G and Honda last year opened assembly plants in Nakuru and Nairobi in a race to win a larger market share in East Africa.

C&G’s plant has a capacity to produce 70,000 units per year while Honda’s can churn out 25,000 units in a similar period.

The companies are betting on a lower tax bill to make their motorcycle brands more competitive at a time when cheaper Chinese and Indian brands have become more popular with individual buyers.

Imports of parts used in local assembly are exempted from the 25 per cent import duty levied on fully built units, giving room to the assemblers to quote lower price tags in their showrooms.

Growth of motorcycle sales has been linked to their increased use in public transport where they are exploiting inefficiencies in traditional services offered by matatus and buses.

Motorcycles are popular in urban areas for their ability to beat delays caused by incessant traffic jams. They are also used heavily in rural areas where they offer more flexibility and wider reach as most areas suffer from poor road networks.

Emergence of the alternative transport system has drawn the interest of investors seeking self-employment, with a large number preferring cheaper Asian models.

Chinese and Indian brands such as Lifan, Bajaj, and King Bird are priced from Sh80,000 while most of their Japanese rivals like Yamaha and Honda cost over Sh100,000.

This shift in pricing has expanded demand beyond corporate customers such as Kenya Power, the police service, and courier firms who have traditionally bought most of the units.