Second-hand vehicles at a car bazaar in Nairobi. Sales of the used units have jumped 15.9 per cent in the first six months of the year. Photo/File
What you need to know:
Data from the Kenya National Bureau of Statistics show that 30, 488 units of used vehicles were sold in the period compared to 26, 286 units a year earlier.
This came as sales of new vehicles grew by 8.6 per cent in the half-year to stand at 6, 390 units, deepening the dominance of these vehicles in Kenya where they are preferred for their lower prices.
Sales of used motor vehicles jumped 15.9 per cent in the first six months of the year, helped by lower prices that have driven demand for the second hand units.
Data from the Kenya National Bureau of Statistics show that 30, 488 units of used vehicles were sold in the period compared to 26, 286 units a year earlier.
This came as sales of new vehicles grew by 8.6 per cent in the half-year to stand at 6, 390 units, deepening the dominance of these vehicles in Kenya where they are preferred for their lower prices.
Second hand vehicle dealers say demand has been boosted by lower prices as the Kenya shilling strengthens against the yen —the currency of Japan which supplies most of Kenya’s vehicle imports.
Most of the used vehicles sold were saloon and station wagons that are normally for personal use, the KNBS data show.
“Prices of used vehicles dropped by a range of Sh50,000 to Sh200, 000 depending on the model,” Robert Marete of Toyota Tsusho, which deals in a wide range of second-hand cars, said .
“This has encouraged consumers to buy vehicles for the first time or upgrade to other models.”
He added that a Toyota NZE model, for instance, was retailing at an average of Sh950, 000 in June compared to Sh1.1 million last year.
A used Toyota Premio was retailing at Sh1.2 million in June, down from Sh1.4 million last year.
The lower prices of the vehicles, including Subarus, Toyotas, Nissan, and Mitsubishis are a consequence of the weakening of the Japanese currency against the shilling, causing importers to make significant savings in foreign exchange.
The shilling currently exchanges at a rate of 0.88 units to the yen and has been gaining steadily since December when the local unit traded at 1.01 units to the currency.
This represents a 13.3 per cent gain for the shilling, an impact that some used car dealers are passing on to consumers. It has remained static at 0.88 units since June, but dealers reckon that the 1.5 per cent levy on all imports, which was introduced last month, could wipe off some of the exchange rate savings.
Economic stagnation
The yen is likely to weaken further in the short term as Japanese Prime Minister Shinzo Abe pursues his policy of a weaker yen to pull Japan out of decades of economic stagnation.
By devaluing its currency, Japan seeks to promote its exports to the world including new and used vehicles to African markets.
While new vehicle dealers are also benefiting from a stronger shilling, their models cost multiple times that of used imports, leaving formal dealers to focus on orders from the government, private companies, and wealthy individuals.
Most of the Kenya’s small businesses and the middle class prefer to buy second hand vehicles, which have seen the used models account for more than 80 per cent of all vehicles sold in the country. New vehicle sales accounted for 17.3 per cent of the total 36, 878 units sold, further losing market share compared to the same period last year when they accounted for 18.2 per cent of the total 32, 167 sold units.
The huge appetite for used cars prompted Toyota Tsusho, the parent firm of Toyota Kenya, to establish a separate unit (Toyotsu Auto Mart) last year that deals in a wide range of second hand brands including Toyota and Subaru.
