Sales of new vehicles slow down ahead of August general elections


Rita Kavashe, Isuzu East Africa managing director. Isuzu had the highest export volumes at 110 units in the review period, up from 67 units a year earlier. PHOTO | DIANA NGILA | NMG

New vehicle dealers recorded a marginal sales growth of 3.9 percent in the half year ended June, a performance they attributed to a wait-and-see posture by customers ahead of the general elections.

Data from the Kenya Motor Industry Association (KMI) shows that the dealers including Isuzu East Africa, CFAO Motors Kenya, and Simba Corp moved a total of 6,492 units in the review period. This was up from 6,246 units sold a year earlier.

The orders had increased at a faster rate of 11.7 percent in the first quarter ended March to 3,203 units, indicating that demand tapered off in the subsequent three months.

“Clients have adopted a wait-and-see stance and this has affected sales,” said Rita Kavashe, the chief executive of Isuzu.

“The industry is also feeling the impact of drought in the agricultural sector and pending bills [unpaid amounts to suppliers of government].”

The run-up to general elections typically results in a slowdown in vehicle purchases among other capital investment decisions. Consumer spending also tends to decline when elections approach, hurting vehicle dealers and sellers of other high-value goods.

Kenyans go to the polls on August 9. The last general election in 2017 was hotly contested, featuring a nullification of the first results by the Supreme Court and a rerun of the process.

The KMI data shows that smaller dealers lost significant market share to a few major dealers who grew their sales in the review period.

Isuzu led with an 18.8 percent sales jump to 2,867 units, benefitting from contracts to lease its namesake vehicles to the government. This raised its market share to 44.2 percent.

CFAO Motors, which recently rebranded from Toyota Kenya, also grew its sales four percent to 1,490 units. The dealer, which sells Toyota and Hino vehicles, ended the period with a 23 percent market share.

A government policy to ban the importation of used commercial vehicles is expected to boost sales of the formal dealers in the long term, particularly those assembling their trucks, buses, and pick-ups locally.

The Kenya Bureau of Standards (Kebs) published a notice saying that used buses more than seven metres in length would not be imported into the country effective July 1.

Trucks with load capacities of 3.5 tonnes and above would also be banned from the same date.

Tractor heads and prime movers not older than three years will continue to be imported until June 2023 after which only new units will be allowed in. The Kebs directive has reportedly been challenged in court.

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