Competition in the imported used vehicle market is set to intensify with the expansion of Toyota Kenya’s affiliate Toyotsu Auto Mart, signalling lower costs of second-hand cars.
Toyotsu, which imports used Toyota saloon cars directly from Japan, has opened a Sh500 million showroom and spare part shop that would allow it scale up imports and include brands such as Subaru, Hino trucks and buses as well as Daihatsu.
The Japanese auto giant has relied heavily on the new vehicles for growth in the market through Toyota Kenya, but is now going big in the used car market with its eye on retail consumers. It’s betting on its brand name and economies of scale to offer competitive prices in the local market that is highly fragmented and has seen the cost of used cars rise by more than 20 per cent in the past year.
“Our aim is to have prices slightly below the market average,” Toyotsu managing director Yoshihiro Goto (pictured) said.
“In instances where the vehicle has very low mileage or where we need to make improvements on it, our prices may be higher.”
Mr Goto added that the Japanese car maker will strive to offer its used cars at between Sh50,000 and Sh100,000 less compared to independent dealers — a pointer that Toyota is keen to wage a price war in a market segment that sells four times more compared to the new auto market.
Toyota’s stranglehold on the new motor market has been shaken with rival dealer General Motor’s coming top on market ranking last year.
Toyota’s market share stood at 24 per cent last year compared to 26.6 per cent in 2005 while General Motor’s stake has increased to 25 per cent from 19 per cent in the same period.
But its quest for a larger piece of used car market is emerging as the second-hand segment experiences sluggish sales on expensive vehicles and high lending rates.
Data from the Kenya National Bureau of Statistics show that sales of used vehicles dropped 22.7 per cent last year to 47,397 units from 61,356 units in 2010 –the peak year.
Despite the drop, the vehicles remain popular among individuals and small businesses due to lower prices than new vehicles.
“We believe that our quality vehicles and other services we are offering will be attractive to customers and help us gain market share,” Mr Goto said. “We are looking at adding 10 more dealership in the country in the medium term.”
Toyotsu is setting its business model similar to that of new auto dealers, offering value added services like after-sales service, insurance and tracking services in partnership with other firms in a one-stop shop model in a bid to win customers.
Tshusho Capital, another subsidiary of Toyota Group, will offer loans to customers at interest rates similar to those of banks, with customers allowed to make deposits as low as 10 per cent of the vehicle’s value.
Besides imports, Toyotsu is also keen to buy cars that were bought new from Toyota to feed its supply of second hand vehicles.
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