New vehicle dealers sales drop 14pc on prices surge
Friday May 05 2023
Sales of new motor vehicles dropped 13.9 percent to 2,758 units in the quarter ended March, signalling another down year for the industry, which has raised prices in response to multiple challenges, including the weakening of the shilling.
The dealers, including Isuzu East Africa, Simba Corp and Toyota East Africa, had sold 3,203 units in the same quarter the year before, according to data from the Kenya Motor Industry Association (KMIA).
Simba Corp, whose brands include Proton and Mitsubishi, registered the largest decline in sales among the major dealers of 26.8 percent to 248.
Orders at Isuzu declined 3.3 percent to 1,174. CFAO Motors, whose brands include Hino and Toyota, bucked the trend to grow its sales by 2.9 percent to 793.
Sales in the industry have been hurt by a confluence of factors such as higher vehicle prices and rising interest rates.
Read: New luxury vehicle sales decline by 15pc
Most purchases are financed by banks, which have raised the cost of loans in recent months amid high inflation and monetary tightening by the Central Bank of Kenya.
“For the [rising dollar] strength, we are responding through price adjustments. The changes have been upwards of 10 percent,” Gabriel Kanyingi, general manager for commercial finance at Isuzu, told the Business Daily in a recent interview.
The weaker performance in the first quarter comes after the formal dealers posted a 6.3 percent sales decline to 13,352 units last year.
The industry’s recent sales peak was seen in 2015 when 19,253 units were sold. The sector is witnessing significant changes in the passenger car segment which constitutes about 15 percent of annual sales.
CMC Motors has announced its exit from the segment to focus on agricultural equipment, opening an opportunity for rivals to take over the Ford, Mazda and Suzuki brands it has been selling.
“Ford will be moving to Salvador Caetano in the third quarter of 2023 and Suzuki will be supported by CFAO [Toyota dealer] from the second quarter of 2023,” said CMC recently.
Mazda will announce the new distributor in the coming months,” CMC said in a recent statement.
The takeover of Ford will add to Caetano’s existing dealerships in Renault, Hyundai and Kia cars in the Kenyan market.
CFAO, which was the second dealer of Suzuki, will now sell the Japanese brand on an exclusive basis. The Mazda brand is still up for grabs.
Ford was the most important franchise for CMC in the passenger vehicle business, having accounted for 78.7 percent of its total vehicle sales last year according to industry data.
Read: Kenya’s 2022 top selling cars
The company sold 388 units of Ford pick-ups and sports utility vehicles in the year ended December 2022, representing a 13.1 percent growth from 343 units a year earlier.
Data from KMIA however shows that the company’s sales of the American vehicles have more than halved from highs of 927 units in 2015.