Car sales defy Covid-fueled price spike to rise 14%

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Economy

Car sales defy Covid-fueled price spike to rise 14%


Used cars being unloaded from a freighter at the Port of Mombasa. FILE PHOTO | NMG

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Summary

  • Data from the Kenya National Bureau of Statistics (KNBS) shows that the number of newly registered units rose to 107,499 units last year from 94,128 the previous year.
  • The uptick came in a year when prices for second cars rose as much as 52% due to a combination of factors, including expensive units in source markets.
  • Japanese cars dominate the Kenyan used car market, with over 80% market share.

Car sales rose 14% last year, defying a record rise in vehicle prices amid a recovery from the economic woes of Covid-19.

Data from the Kenya National Bureau of Statistics (KNBS) shows that the number of newly registered units rose to 107,499 units last year from 94,128 the previous year.

The uptick came in a year when prices for second cars rose as much as 52% due to a combination of factors including expensive units in source markets like Japan, a weakened shilling against the dollar, and supply issues due to coronavirus restrictions.

Expensive cars were expected to dampen demand in an economy that has yet to fully recover from the effects of Covid-19 that triggered layoffs, job cuts and business closures.

This is a recovery from the performance recorded in 2020, when sales fell 16.5% from 109,751 the previous year due to shipping problems caused by the closure of ports in countries like Japan.

“People had been adopting a wait-and-see attitude in 2020 because of Covid, but since last year things have started to pick up and sales are getting back to normal,” Charles Munyori, secretary general of the Kenya Auto Bazaar Association, who represents used car dealerships.

Kenya eased restrictions that were imposed to curb the spread of the coronavirus last year, marking the start of economic recovery as businesses resumed hiring and ended pay cuts, which in turn increased the purchasing power.

Prices of popular Japanese models for 2014 such as Toyota Harrier, Toyota Fielder, Toyota Rav 4, Toyota Premio and Nissan X-Trail have increased by a range between 200,000 and 600,000 shillings since April last year.

Shipments were halted for most of 2020 after source markets like Japan closed ports due to bans on travel and social gatherings, causing shipment delays for months.

The closure has also led to increased shipping costs as shipping companies have raised prices due to limited spaces resulting in record prices for used cars which are popular in Kenya especially with the middle class.

Japanese cars dominate the Kenyan used car market, with over 80% market share.

Motorcycle registrations also rose as the economic recovery took hold in one of the country’s most popular modes of transportation. KNBS data shows motorcycle registrations rose 15% to 285,203 units from 246,705 a year earlier.

Motorbikes are preferred for their ability to avoid traffic jams and low fares in urban centers, which makes them convenient, especially during peak hours on the roads.

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