Economy

New vehicle sales drop to 3-year low

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Honda showroom on Mombasa Road in Nairobi. FILE PHOTO | NMG

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Summary

  • Sales of new motor vehicles fell to a three-year low in the 12 months to December 2020, showing the impact of the economic slowdown and disruptions brought by the Covid-19 pandemic.
  • Kenya’s economy took a major hit from mid-March when the first case of the coronavirus was reported.
  • The government implemented a series of measures aimed at curbing the spread of the respiratory disease, including closing schools and bars, restricting travel and imposing night-time curfew.

Sales of new motor vehicles fell to a three-year low in the 12 months to December 2020, showing the impact of the economic slowdown and disruptions brought by the Covid-19 pandemic.

Dealers, including Toyota Kenya, Isuzu East Africa and Simba Corporation, moved a total of 11,086 units in the review period, representing a 16 percent slump compared to 13,199 units a year earlier, according to data from the Kenya Motor Industry Association (KMI).

Kenya’s economy took a major hit from mid-March when the first case of the coronavirus was reported.

The government implemented a series of measures aimed at curbing the spread of the respiratory disease, including closing schools and bars, restricting travel and imposing night-time curfew.

The restrictions, coupled with the panic and the general economic weakness that ensued, saw monthly sales of new vehicles fall steadily to a low of 566 units in May.

The government, however, started easing most of the restrictions in July in a move that saw orders for new vehicles rise strongly towards the end of the review period.

The KMI data shows that monthly sales rallied to peak at 1,287 units in December, mitigating the sharp contraction seen in the second quarter ended June.

Dealers had feared that sales for the year under review would fall as much as 30 percent at a time when there was great uncertainty about the progression of the pandemic and when the economy would be reopened.

“The easing of inter-county travel restrictions in July has seen a gradual economic recovery driven by small and medium enterprises (SMEs) who have supported our business. We have seen heightened economic activities especially in the construction and agricultural sectors,” Isuzu’s chief executive, Rita Kavashe, said.

“While Kenyans have adopted conservative spending to meet their domestic needs, there is now a growing appetite for investments driven by emerging financing opportunities.”

She cited the company’s delivery of 100 units of 33-seater buses for public transport valued at Sh530 million in July as an example of the renewed demand for vehicles.

The travel restrictions had hurt earnings of cargo transporters and public service operators and left them with excess capacity, reducing their need to expand their fleets in the first half of the year under review.

Nearly all the dealers registered lower sales, including the largest players. Toyota’s sales contracted the most by 24.1 percent to 2,684 units compared to 3,538 units in 2019.

The dealer sells its namesake brands besides holding the franchise for Hino commercial vehicles and Suzuki cars.

Simba Corp’s orders declined 19.2 percent to 1,691 units from 2,094 units across its Mitsubishi commercial vehicles, Renault cars and Maruti pick-ups.

Isuzu, which sells its namesake pick-ups, buses and trucks, saw its sales drop 15.8 percent to 4,340 units from 5,158 units. The sales slump saw a number of dealers reduce their workforce as part of cost-cutting measures to help ride out the crisis.

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