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Corona sends car sales screeching to near halt

By People Reporter
Friday, May 22nd, 2020
Vehicles at Mombasa port. Industry leaders say demand for commercial and PSV vehicles declined last month and this trend is expected to will continue this year. Photo/PD/FILE

Steve Umidha @UmidhaSteve

The coronavirus pandemic caused a slight decline in April’s auto sales, according to the latest industry data.

Car dealers sold 3,923 units by end of last month, 679 vehicles less the industry sold during the same period last year – despite a slight growth recorded in the number of units sold in March, which stood at 2,661 units. Vehicle manufacturers sold 2,700 units in the first three months of 2019.

The reported sales by Kenya Motor Industry (KMI) provide some perspective on the industry, whose numbers were expected to decline by about 30 per cent this year, according to KMI Chairperson Rita Kavashe.

PSV vehicles

“The demand for commercial and PSV vehicles declined last month and this trend will continue into the year, but we are hopeful with the markets like Uganda where the situation has shown signs of repression,” said Kavashe, also the managing director of Isuzu East Africa

Owing to the uncertainty brought by the coronavirus pandemic, Kenyans are expected to spend less on new vehicle purchases whose impact will only mean a reduced demand for such orders.

What’s more, several government ministries and agencies that had previously placed tenders for vehicle leases as well as local purchases in line with President Uhuru Kenyatta’s ‘Build Kenya, Buy Kenya’ directive, are expected to temporary halt such plans with most of the monies now channelled towards fighting Covid-19.

This, in return, is projected to deny car dealers the much- needed revenue stream from the State.

Delayed payments

Delayed payments and reduced new businesses as well as schools closed until at least June and the extension on partial lockdown, commercial vehicle class has been adversely affected with most dealers heavily relying on State leasing programmes to stay afloat.

Through the ‘Build Kenya, Buy Kenya’ initiative, the government seeks to reduce the level of motor parts importation to make it possible for local companies to buy from local manufacturers.

The initiative will also help reduce tariffs for local car assemblers, lower high costs of additional taxes, charges, levies as well as logistical charges to grow the industry and make it competitive.