Sales of new motor vehicles for the year ending this month are projected to drop by at least 8.5 percent compared to 2018, marking it harder for the industry to reclaim its previous sales peak.
Data from the Kenya Motor Industry Association (KMI) shows that the dealers including Isuzu East Africa and Toyota Kenya had sold 12,030 units in the 11 months ended November.
Their sales for this month is expected to come in at about 1,093 units — the average order size per month. This will bring their full-year sales to about 13,123 units, which is 8.5 percent below the 14,353 units they sold in the whole of 2018.
Their best performance in recent years was in 2015 when they moved 19,451 units, a level, which they are trailing by more than 3,000 units.
Isuzu, the country’s biggest dealer, was among the few companies to record sales growth in the 11 months ended November.
The dealer moved 4,727 units in the review period, surpassing the 4,632 units it sold in the whole of 2018.
Toyota Kenya, which is ranked second, saw its unit sales drop to 3,162 from 3,973 over the same period. Simba Corporation was among the other dealers whose sales also dropped.
The KMI data shows that the industry’s sales opened at 835 units in January and rose strongly to a high of 1,372 units in August before tapering off to 867 units in November.
The performance has been attributed to reduced demand from the government.
“The national government has cut spending, especially in this fourth quarter. Dealers are also cautious about supplying to county governments because of the pending bills,” said Rita Kavashe, chairperson of KMI and Isuzu’s chief executive.
She added that banks are also yet to increase their financing of vehicles even after the repeal of lending controls. Ms Kavashe said the industry now expects 2020 sales to remain flat or grow by five percent at best.
Dealers are grappling with a tough business environment that has been amplified by increased taxation of vehicles, making them significantly more expensive.
The latest tax tweaks, for instance, has raised the prices of most new vehicles by hundreds of thousands of shillings. Expensive models, including luxury cars and heavy-duty trucks, have seen their showroom prices rise by more than Sh1 million.