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INDUSTRY:  The number of new cars sold in January fell by 22.5 per cent to 793 units, new industry data shows. Kenya Motor Industry Association (KMIA), a lobbyist for the formal motor sector attributed the drop in sales from 1,023 units in a similar period last year to supply problems resulting from the Russian invasion of Ukraine and the general financial hardship being experienced by majority of Kenyans.

The lingering war broke in February 2022 causing bottlenecks in supply chains, and driving up costs for everything from labour to raw materials, with key sectors like the automotive industry bearing the brunt of those contests.

Kenyans are still grappling with sky inflation in the middle of a sluggish economy with reduced cash flow that has forced many workers to cut demand for non-essential items like vehicles.

However, Managing Director of CFAO Motors – formerly Toyota Kenya Ltd, Arvinder Reel is confident that this year could be different, betting on political stability, availability of credit, and logistical improvements whose impacts he said, are already felt.

“We are expecting the market to grow by 15 per cent this year. However, challenges still linger such as the exchange rate depreciation as well as production constraints which are low, but we are optimistic for the year,” he said in a recent telephone interview.

Financing options

Expected higher spending from buyers and ease of the economic disruption of coronavirus restrictions as well as cheaper financing options by the banks were all mentioned as reasons for this year’s growth projection.

That optimism, Reel said, was being supported by easing inflation, a measure of the cost of living over the last 12 months which slowed to 9.1 per cent in December from 9.5 per cent a month earlier.

The drop in the months of November and December last year signaled a spark of easing in the cost of living crisis, which hit the highest levels in nearly five and a half years on soaring food and energy prices – impacting key sectors like manufacturing.

Supply chain glitches such as hip shortage pushed car prices higher last year, making it hard for automakers to meet demand due to delivery delays and a shortage of many new makes and models.