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Companies

New motor vehicle sales drop 6.5pc

chief executive Rita Kavashe
Isuzu’s chief executive Rita Kavashe. FILE PHOTO | NMG 

Sales of new motor vehicles dropped 6.5 per cent in the nine months ended September, with individual dealers recording mixed performances.

Data from the Kenya Motor Industry Association (KMI) show that the companies including Isuzu East Africa and Toyota Kenya posted unit sales of 10,081 in the review period compared to 10,793 a year earlier.

Isuzu had the highest sales growth of 14 per cent, with orders of its namesake commercial vehicles rising to 3,913 from 3,430 units.

The company has attributed its performance to special financing deals with banks.

“Our deals with lenders such as Co-op Bank have helped us drive sales,” Isuzu’s chief executive Rita Kavashe told the Business Daily in a recent interview.

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Isuzu and other sellers of commercial vehicles including Simba Corporation and Toyota are set to benefit from the recent government ban on imports of used trucks with load capacities of 3.5 tonnes and above.

The ban on second-hand trucks comes after the government dropped proposals to also restrict imports of used passenger cars after protests from local dealers.

In the review period, Simba’s unit sales also rose 2.9 per cent to 1,565 compared to 1,520 a year earlier. Simba, whose franchises include Mitsubishi and Mahindra, has launched a legal battle to keep its Renault car dealership.

Its partner in the Renault joint venture, Salvador Caetano Group, terminated the Kenyan company’s contract in February after they fell out over strategy.

The KMI data shows that Renault cars were last sold in August as the row escalated.

According to court records, Caetano in September last year approached Simba with a new proposal to sell Hyundai vehicles and spares in the country.

Simba declined the offer and the Portuguese multinational subsequently wrote to the Kenyan company on February 19, 2019 terminating the Renault joint venture over failure to meet “defined objectives.”

Toyota was among the dealers to record lower sales in the nine months, with the local franchise holder moving 2,642 units compared to 3,030 the year before. This represents a decline of 12.8 per cent.

Dealers said that stricter lending standards adopted by banks since introduction of lending rate controls in 2016 continue to slow down sales in the new vehicle industry. Most new vehicle purchases in Kenya are financed by banks.

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