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New car sales surge 35pc on recovering economy


Economy

New car sales surge 35pc on recovering economy


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Porsche Macan Sports at a showroom in Nairobi. FILE PHOTO | NMG

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Summary

  • Sales of new motor vehicles surged 35 percent in the first half of the year as the economy continued to recover from the shocks of the Covid-19 pandemic.
  • Formal dealers such as Simba Corporation, Toyota Kenya and Isuzu East Africa moved a total of 6,246 units in the review period compared to 4,628 units the year before.

Sales of new motor vehicles surged 35 percent in the first half of the year as the economy continued to recover from the shocks of the Covid-19 pandemic.

Formal dealers such as Simba Corporation, Toyota Kenya and Isuzu East Africa moved a total of 6,246 units in the review period compared to 4,628 units the year before when the coronavirus disruption was most severe, data from Kenya Motor Industry Association (KMI) shows.

The first coronavirus case was recorded in the country in mid-March last year, killing hundreds and setting off pandemic containment measures that dealt the economy a major blow.

More than a million people lost their jobs while most of the remaining workers took pay cuts, with sectors such as tourism and real estate suffering the most.

As uncertainty mounted, sales of new vehicles fell 26.4 percent in the half-year ended June 2020 from 6,294 a year earlier.

The sales rebound in the six months to June signals continued economic recovery amid reduced Covid-19 deaths and resumption of most socio-economic activities such as international travel, in-person learning and domestic travel.

Dealers with a presence in the commercial vehicle segment — which dominates the formal automotive industry — benefited the most from the recovery.

Simba Corp posted the largest unit sales jump at 51 percent to 906 in the review period compared to 600 the year before.

The dealer sells Mitsubishi trucks, Mahindra pick-ups, Renault and Proton passenger cars.

Isuzu was second with a 34.4 percent gain to 2,413 from 1,795 a year earlier. The dealer sells its namesake brand of sport utility vehicles (SUVs), pick-ups, buses and trucks.

Toyota was third after its sales jumped 24.3 percent to 1,432 from 1,152. The dealer sells its namesake passenger cars, pick-ups and Hino trucks.

The rebound of new motor vehicle sales signals increased business confidence and rising investment spending. The rising demand for commercial vehicles, in particular, is a pointer to increased activity in sectors such as transport, trade, infrastructure and manufacturing.

In its recent review of economic trends, Stanbic Bank said reduced restrictions have helped boost the recovery.

“As expected, the lifting of public health restrictions at the beginning in May resulted in a significant improvement in business activity in May,” the bank said in the report.

“Fewer restrictions resulted in higher demand as indicated by the rise in new orders. Firms increased their stock of purchases and employment levels so as to increase their output levels to meet the rising demand.”

The bank said firms appear to be increasingly optimistic in the short term as new Covid-19 case numbers continue to fall amid increased vaccinations.

The International Monetary Fund projects Kenya economy’s real gross domestic product growth to jump to 7.6 percent this year, up from a 0.1 percent contraction in 2020.



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