Used car dealers shrugged off the rising prices to grow sales 24.3 per cent on increased demand.
Data from the Kenya National Bureau of Statistics show that 76,122 units of used vehicles were sold in 2013 compared to 61,233 units the previous year.
The growth comes in a year that saw the price of second hand cars rise by an average of 20 per cent.
The dealers’ lobby — Kenya Auto Bazaar Association (KABA) — attributed the sales jump to the ease of accessing loans and cheaper credit.
“There are a lot of financing opportunities including company-funded schemes and asset financing. This has encouraged buyers as there are very few cash purchases,” said secretary-general Charles Munyori.
The new vehicle sales also recovered beyond the 2008 peak as General Motors East Africa (GMEA) cemented its position as Kenya’s leading auto dealer.
Data from the Kenya Motor Industry, the dealers lobby, show vehicle sales last year grew 13.1 per cent to 14,542 units, surpassing the previous peak of 13,135 units recorded in 2008.
The auto industry had over the past five years struggled to break the 13,000 units mark as the sector took longer to recover from economic shocks that hit Kenya in 2008 due to the global financial crisis and the post-election violence.
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 cars account for more than 80 per cent of all vehicles sold in the country.
New vehicle sales accounted for 17 per cent of the total 90,664 units sold last year, further losing market share compared to 2012 when they accounted for 17.3 per cent of the total 74,223 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.
Most of the used vehicles sold were saloon, station wagons for personal use and pick-ups mostly used for commercial purposes, the KNBS data show.
But the prices of second-hand cars have increased on the rising preference for vehicles with low mileage and new models as well the introduction of new taxes.
Kenya mid-last year introduced rail fund, which is built from charging a levy 1.5 per cent on the cost of all imported goods, to develop a new railway line between Mombasa port and Uganda.
“Prices of second-hand cars have gone up because we are now selling new models and new shapes,” said Ahmed Mohamed, sales manager at Toyopet Automobile.
“A 2007 model of Toyota Fielder is now going for about Sh1.3 million compared to the earlier model which was Sh950,000 on average in 2012. But the demand is very high from both individuals and SMEs who have increased access to financing which has made it easy to import used cars.”
The average rate for commercial bank loans eased to 16.99 per cent in December 2013 from 18.15 per cent in the same month a year earlier according to data from Central Bank of Kenya.