Steve Umidha @UmidhaSteve

New vehicle sales in Kenya dropped 14.6 per cent last year, hit by a sluggish economy that was triggered by the coronavirus (Covid-19) pandemic, the umbrella body for the industry has said.

The industry sold 11,086 vehicles the whole of last year, down from 12,981 in the previous year, figures released by Kenya Vehicle Manufacturers Association (KMIA) yesterday show.

Global carmakers such as Volkswagen have been investing in vehicle assembly in the East African nation in recent years, attracted by its long-term economic growth prospects and its strategic location as a hub for the region.

But that momentum cooled as a result of the ongoing global Covid-19 pandemic that has seen the industry register inconsistent figures.

Vehicle assemblers

Before the pandemic vehicle assemblers were, however, investing in Kenya to take advantage of growing demand for newer, environmentally friendly vehicles.

Volkswagen, for instance, doubled its Kenyan production two years ago with other companies also announcing plans to start or restart assembly in Kenya including Peugeot and Volvo.

Isuzu also increased its local presence in 2016 by buying a 57.7 per cent stake from General Motors in its Kenyan franchise.

Those expansion plans by car manufacturers could pick up this year, according to car expert Trevor Lumenya who reckoned that dealers will likely invest in 2021 and beyond despite the looming general elections next year.

“From my conversations with some dealers, there is an obvious optimism and positive sentiments from most companies.

Some companies have aligned budgets for such moves, “he said in a telephone interview.

Experts had predicted that the industry would perform poorly this year because of the pandemic but improving the business environment could now provide a glimpse of hope for car dealers this year.

Kenya’s private sector recorded a modest growth in December last year, with output rising at the slowest rate in six months, even though new orders quickened marginally.