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Sales of new vehicles fall in first half of 2019

Arvinder Reel
Toyota Kenya MD Arvinder Reel. FILE PHOTO | NMG 

Sales of new motor vehicles fell 2.5 percent in the first half ended June, with Isuzu East Africa being the only major dealer to buck the downward sales trend.

The decline in orders reverses the rebound in sales in the same period last year as dealers then benefited from pent-up demand in the wake of the conclusion of the 2017 general election.

Data from the Kenya Motor Industry Association (KMI) shows that total unit sales of the dealers including Toyota Kenya, Simba Corporation and Isuzu East Africa stood at 6,294 in the half year ended June.

This is down 2.5 percent compared to their sales of 6,456 units the year before.

Motor vehicle dealers are among the businesses registering subdued demand in the economy, a trend that has been blamed on tighter credit markets, among other headwinds.

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Most new vehicle purchases are financed by banks whose lending appetite has been dulled by lower margins in the wake of interest rate controls.

Besides stricter lending standards by banks, sales in the industry were also hit by disruptions in the luxury car segment.

Simba Corporation, for instance, last year lost the BMW franchise to rival Inchcape Kenya in what led to lack of sales of the German cars for months. In the review period, Toyota’s unit sales dropped to 1,590 compared to 1,579 a year earlier while those of Simba Corporation fell to 998 from 1,004. Isuzu, however, bucked the slump as its sales jumped to 2,485 from 1,974.

Dealers say they expect sales to rise in the second half of the year. “Industry sales should see a slight growth from September to the end of the year following budget approvals,” said Rita Kavashe, the chairperson of KMI and CEO of Isuzu East Africa.

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