New Vehicle Dealers sales Drop 14pc on Prices Surge

Sales of new cars fell 13.9 percent to 2,758 units in the three months that ended in March, indicating yet another bad year for the sector, which has increased prices in response to a variety of problems, including the depreciation of the shilling.

According to data from the Kenya Motor Industry Association (KMIA), the dealers, which included Isuzu East Africa, Simba Corp, and Toyota East Africa, had sold 3,203 units in the same quarter the year prior.

The largest sales decline among the major dealers was recorded by Simba Corp, whose brands include Proton and Mitsubishi, with a decline of 26.8% to 248.

Isuzu’s orders dropped by 3.3% to 1,174. CFAO Motors, whose brands include Toyota and Hino, defied the general trend and increased sales by 2.9% to 793.

A number of interrelated factors, including increased vehicle prices and rising interest rates, have hurt industry sales.

The majority of purchases are financed by banks, which have increased loan rates recently due to high inflation and the Central Bank of Kenya’s tightening of monetary policy.

“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, said.

The formal dealers reported a 6.3 percent sales decline to 13,352 units last year, which precedes the weaker performance in the first quarter.

The most recent sales high for the sector was 19,253 units sold in 2015. The passenger car segment, which makes up about 15% of annual sales, is undergoing significant changes.

Due to CMC Motors’ announcement that it will leave the market to concentrate on agricultural equipment, competitors now have the chance to acquire 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.

In the upcoming months, Mazda will make the new distributor public, according to a recent statement from CMC.

With the acquisition of Ford, Caetano will have additional dealerships for Kia, Hyundai, and Renault vehicles in Kenya.

The Japanese manufacturer will now only be sold by CFAO, the second Suzuki dealer. Still up for grabs is the Mazda name.

According to data from the industry, Ford was CMC’s most significant franchise in the passenger vehicle market, accounting for 78.7% of its total vehicle sales in the previous year.

In the fiscal year that ended in December 2022, the company sold 388 units of Ford pickup trucks and sport utility vehicles, an increase of 13.1% from 343 units in the prior year.

However, according to KMIA data, the company’s sales of American automobiles have more than halved since reaching highs of 927 units in 2015.