Inside Politics

New car sales jump 41pc as Covid restrictions ease

Thursday, September 23rd, 2021 00:00 |
Dinesh Kotecha, Simba Corporation Ltd Group CEO.

New vehicle sales climbed by 41 per cent in August as dealers benefitted from easing of the economic disruption of coronavirus  restrictions.

Statistics from Kenya Motor Industry Association (KMI), the lobby group for the formal motor sector, shows that a total of 1,472 vehicles were sold in August compared to 1,044 units or 40.9 per cent, in a similar period last year, bringing to a total of 8,811 units sold since January 2021.

Car dealers expect a better fourth quarter buoyed by the impressive growth since April this year when the industry recovery began to sprout.

As a result, players in the sector expect the Kenyan auto industry to perform even better beyond this year despite the Coronavirus pandemic owing to the demand for commercial vehicles, with the sector poised to hit over 12,000 total units by the close of 2021.

According to Dinesh Kotecha, Simba Corporation Ltd Group CEO, the market will do better amid concerns on the looming general elections, a period that is synonymous with slowed business activities resulting from uncertainties.

“It is a positive trend, I think this will carry on but let’s see how the rest of the year performs,” Kotecha said in a telephone interview yesterday.

Market players said the reopening of the economy six months ago had provided some welcome relief for the industry, and the August figures also suggest that dealers in used cars could record an improvement next month.

This is after most dealers in that segment were forced to cut prices by up to 15 per cent for most part of last year and partly at the beginning of the year in response to depressed demand because of the Covid-19 pandemic.

Pace of decline

The pace of decline at the time, had been evident for most car dealers until April this year, when recovery trend was clearly seen owing to effects of the pandemic even though sentiments from industry observers predict better months ahead because of near full economic rebound.

With a huge number of Kenyan workforce now working from their offices, the market can only get better, according to car enthusiast Trevor Lumenya.

“You can clearly see that things are improving for car companies, and this can be justified by the recent launch of the new Land Rover Defender 90 into the Kenyan automotive.

This shows that dealers are confident of the local market despite the prevailing challenges,” he said.

Kenyan workforce, especially those drawn from the private sector, faced by financial uncertainty, were driving far less for leisure activities as automakers faced reduced sales.

The private sector has largely contributed to the industry’s growth with output and new orders rising solidly and fastest in a year amid loosened travel restrictions. 

That expansion was seen following the relaxation of measures on curfews and travel between counties. Firms also reported an increase in client orders.

Kenya’s private sector activity improved for a fourth straight month in August as firms saw a faster expansion in new businesses compared to July, according to the latest PMI survey data by Stanbic bank.

The improvement in the Markit Stanbic Bank Kenya Purchasing Managers’ headline index which rose to 51.1 from 50.6 in the previous month, was attributed to increased demand during the month, as well as employers’ hiring ability.

Those readings have remained above the 50.0 neutral mark for the fourth month in a row. 

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