Governors rev up new car sales 50pc in first quarterTuesday April 15 2014
New cars sales jumped 49.9 per cent in the quarter ended March, buoyed by demand from governors and the construction sector.
Dealers sold 4,223 units in the three months to March compared to 2,816 in the same period last year, data from the Kenya Motor Industry shows.
This marked the biggest quarterly jump in more than a decade with sales of pick-ups and trucks being the biggest driver of the growth in what could see the dealers break last year’s annual peak sales of 14,542 units.
“The main growth driver guiding truck sales is increased projects in construction and infrastructure,” Rita Kaveshe, General Motors East Africa (GMEA) chief executive told the Business Daily Tuesday.
“County purchase of utility vehicles explains the increase in pick-ups sales,” added Ms Kaveshe in a trend that look set to boost GMEA’s market share given its heavy representation in the trucks and pick-ups market via its Isuzu brands.
The pick-up sales stood at 1,592 units while those of trucks were at 1,392 units with the two segments, accounting for 70.6 per cent of the vehicle sales in the quarter.
Kenya ushered the devolved system of government last year to hasten development at the grassroots, leading to the creation of 47 counties that control an annual budget of more than Sh200 billion.
The devolved units created with the aim of taking more decisions at a local level in what has seen most firms realign their business plans to capture spending at the counties.
Auto dealers, for instance, are expanding their sales networks to the counties as they prepare to cash in on increased demand from the devolved units and businesses.
But Ms Keveshe said that most of the orders came from the private sector, with the government having scaled down its purchases of vehicles in favour of leasing where it offered Toyota Kenya a contract to lease it 1,200 cars.
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The contract is worth about Sh3 billion but cars supplied through the deal are not captured in the sales data.
GMEA and Simba Motors that deals in Mitsubishi trucks have been the biggest beneficiaries of the growth seen in agriculture, transport and real estate sectors that has significantly raised demand for commercial vehicles.
In the nine months to September, agriculture expanded by 5.1 per cent while construction and transport grew by 11 and 5.1 per cent respectively.
The government has poured billions of shillings to revamp infrastructure at the counties while high-net investors are betting on real estate — which is emerging as a favourite investment class ahead of bonds and equities.