New car sales surpass 10k mark on economic rebound
Vehicle sales rebounded in October with 1,117 new units sold to surpass the 10,000 mark for the first time signalling a return to normalcy, a new report says.
This follows the easing of supply chain bottlenecks leading to improved sales on the back of a general elections that had earlier contributed to low sales months.
Kenya Motor Industry Association (KMIA) data shows that year-to-date total sales have now hit 11,045. During that period, consumers’ preference for SUV and light commercial vehicles continued to grow, making up a chunk of total cars sold over the year.
Experts say this could be linked to the new political class which is buying new vehicles. The likes of Simba Corporation unveiled the PROTON X70, the flagship model of the Proton brand in the Kenyan this month, pointing to a growing appetite for the SUV segment.
“We started this journey two years ago with the assembly of the Proton SAGA at our AVA facility in Mombasa. The local assembly of Proton SAGA has helped us to introduce the Proton brand into the Kenyan market,” commented Dinesh Kotecha, CEO of Simba Corporation during the launch, projecting a “better than expected year” for auto dealers.
Typically, the months of September, October and December tend to see car manufactures extend discounts to get sales across the line, but with the Central Bank hike in interest rates recently to fight inflation could affect the cost of financing a new car than it was previously.
Annual inflation up
In return, that could cut the demand and add new pressure to the auto industry, which had been struggling with depleted inventories during the pandemic even before the European war broke in February.
The country’s annual inflation accelerated for the eighth straight month to 9.6 percent in October of 2022, from 9.2 per cent in September and above market forecasts of 9.5 per cent.
It was the steepest inflation rate since May of 2017, breaching the upper limit of the central bank’s target range of 2.5%-7.5% for the fifth month.
The increase came even as the CBK raised the key lending rate by 75 basis points to 8.25 per cent, matching the Federal Reserve hike in September as central banks struggle to tame inflation.
The revenue index by Stanbic Bank Kenya Purchasing Managers Index (PMI) was down from a seven-month high of 51.7 the sector posted in September, when renewed growth was indicated due to the end of the national election period.
Labour market indicators suggested a continued but cautious employment growth and longer workweeks in October – a synonymous period for seasonal hiring.
“New orders, employment and purchasing growth recorded weaker expansions. Bar manufacturing output contracted slightly for the seventh time in eight months. However, the 12-month output outlook improved to 15-month high,” said Mulalo Madula, an economist at Standard Bank.
