New luxury vehicle sales defy inflation to accelerate 17pc
Data from the Kenya Motor Industry Association shows that sales of car models like Mercedes and BMW stood at 124 units in the six months to June, rising 17 per cent from 106 units a year earlier. Courtesy: google pics
Sales of new luxury cars defied double-digit inflation to rise 17 per cent in the first half 2012, beating the downturn in that market segment, thanks to high demand from companies and wealthy individuals.
Mercedes Benz sales were in particular driven by the Judiciary, which snapped up 40 units in six months.
Data from the Kenya Motor Industry Association shows that sales of car models like Mercedes and BMW stood at 124 units in the six months to June, rising 17 per cent from 106 units a year earlier.
This came as total sales in the new vehicle market dropped to 5,881 units from 6,140 units in the comparable period, representing a 4.2 per cent contraction.
The slump has been attributed to the high interest rates, inflation and the weak shilling in the fourth quarter of last year that pushed up vehicle prices by a third, slowing down demand.
Luxury car dealers however say that companies and wealthy individuals have shrugged off the macroeconomic numbers to buy cars that cost between Sh6 million and Sh20 million each.
“We have seen increased demand from individuals, medium-sized business owners, and corporates,” said Roy Kyalo, the marketing manager at Bavaria Auto Kenya, which sells BMW cars.
Mercedes Benz, sold by DT Dobie, recorded the highest sales at 53 units though this was down from 54 units last year. Mercedes sales were supported by a new contract from the Judiciary.
“We delivered the units to the Judiciary and the contract lifted sales from our other clients,” said Sameer Asghar, the general manager of Mercedes at DT Dobie.
In 2009, the government stopped its officials from using luxury cars, especially those with an engine capacity exceeding 1.8 litres, a move that saw dealers like DT Dobie respond by introducing models complying with the set threshold.
DT Dobie also deals in Jeep Grand Cherokee luxury cars whose sales rose to 19 from 10 units.
Uptake of the two models raised the dealer’s total luxury sales to 72 units from 64 but its market share dropped two percentage points to 58 per cent.
Bavaria Auto’s sale of BMW cars rose from 23 to 27 units, making it the second largest luxury dealer.
BMW’s sales have risen the fastest in recent years, an increase that saw the brand beat Mercedes for the first time by five units to stand at 16 units in the quarter ending March.
CMC Holdings, which sells Jaguar, Range Rover, Land Rover Discovery and Freelander models, raised its sales to 25 units from 19 units, ranking third in the luxury market.
The dealers are competing on brand reputation, price, and customer service.
They have raised the stakes with new models as they seek to capture new demand from wealthy individuals and institutions where directors account for the bulk of the purchases.
BMW is set to launch the 2012 BMW 3 series, adding to its portfolio of the brand including BMW 5 series priced between Sh9.5 million to Sh20 million, X6 (Sh13 million), X5 (Sh12 million, and X1 (Sh5.5 million).
DT Dobie’s Mercedes S class is one of the most expensive, retailing at Sh25 million.
The cheapest Mercedes, C-class, retails at Sh6 million.
DT Dobie has also announced plans to introduce American luxury car, Dodge, in the Kenyan market, a move that is expected to further raise competition.
CMC recently introduced Range Rover Evoque priced from Sh11 million and has sold four units of the model since the beginning of the year.
Its other brands include Range Rover Vogue retailing from Sh16.5 million to Sh19.9 million and Range Rover Sport priced from Sh12.5 million to Sh17.3 million.
The luxury saloon car market has suffered from the government’s policy to ditch the high-end models in favour of fuel-efficient models such as Toyota and Volkswagen Passat.
