Economy

Car sales defy Covid-fuelled price surge to grow by 14pc

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Second hand cars being offloaded from a Cargo Ship at the Port of Mombasa. FILE PHOTO | NMG

Car sales grew 14 percent last year, defying a record increase in vehicle prices amid a recovery from Covid-19 economic hardships.

The Kenya National Bureau of Statistics (KNBS) data shows that the number of newly registered units rose to 107,499 units last year up from 94,128 the previous year.

The rise emerged in a year when second car prices increased by up to 52 percent due to a combination of factors including costly units in source markets like Japan, a weakened shilling against the dollar and supply hitches due to the Coronavirus restrictions.

The costly cars were expected to dim demand in an economy that is yet to fully recover from Covid-19 effects which triggered layoffs, job cuts and business closures.

This is a recovery from the performance recorded in 2020 when sales plunged 16.5 percent from 109, 751 the previous year due to the shipping hitches caused by the closure of ports in countries like Japan.

“People had adopted a wait-and-see in 2020 due to Covid, but since last year things started picking and sales are going back to normal,” Charles Munyori, secretary-general of Kenya Auto Bazaar Association, which represents used car dealers.

Kenya eased restrictions that had been imposed to curb the spread of the coronavirus last year marking the start of the economic recovery as firms resumed hirings and ended salary cuts, which in turn boosted the spending power.

The prices of popular Japanese models for 2014 such as Toyota Harrier, Toyota Fielder, Toyota Rav 4, Toyota Premio and Nissan X-Trail increased by a range of between Sh200,000 and Sh600,000 since April last year.

Shipments were disrupted for the larger part of 2020 after source markets like Japan closed ports due to the ban on travel and social gatherings, prompting delays in shipments for months.

The closure also led to an increase in shipping costs as shipping firms hiked prices due to limited spaces prompting the record high prices for second-hand cars that are popular in Kenya, especially with the middle class.

Cars from Japan dominate the Kenyan second-hand car market, taking more than 80 percent of the market share.

Motorcycle registrations also grew as the economic recovery was felt in one of the country’s most popular mode of transport. The KNBS data shows that registrations of motorcycles grew 15 percent to 285,203 units from 246,705 a year earlier.

Motorcycles are preferred for their ability to beat traffic snarl-ups and low fares in the urban centres, making them convenient, especially during peak hours on the roads.

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