Car sales fall again in May as Covid-19 pandemic bites
By Steve Umidha, June 19, 2020
Steve Umidha @UmidhaSteve
New vehicle sales continued to fall sharply in May, though at a softer rate, as the coronavirus (Covid-19) pandemic hurt demand and production, Kenya Motor Industry (KMI) Association reported yesterday.
Car dealers sold just 568 units during that period compared to 594 vehicles in April with a total of 3,866 vehicles sold since the start of the year.
The reported sales by Kenya Motor Industry (KMI) provide some perspective on the industry, whose numbers are expected to weaken by about 30 per cent this year, according to KMI Chairperson Rita Kavashe.
“Demand for commercial and PSV vehicles have been on a decline since March and this trend will continue into the year,” said Kavashe, also the managing director of Isuzu East Africa Ltd.
Single month
The industry had shown an early steady peak in February before the pandemic hit in a period that saw 1,049 units sold – the best the sector has seen in a single month since the start of this year.
Industry data shows that this trend is likely to continue for the foreseeable future owing to the uncertainty brought by Covid-19, with Kenyans expected to spend less on new vehicle purchases whose impact will only mean a reduced demand for such orders.
Though the Covid-19 lockdown measures were eased a few weeks ago, the number of orders is likely to continue in a similar fashion.
Other factors likely to slow the industry’s growth is the unwillingness by government ministries and agencies to spend on new vehicles.
This is despite previously placing tenders for vehicle leases as well as local purchases in line with the President Uhuru Kenyatta’s “Build Kenya, Buy Kenya” directive.
This in return is projected to deny car dealers the much-needed revenue stream from the State.
Delayed payments and reduced new businesses as well as schools closed until at least September and the extension on partial lock down, commercial vehicle class has been adversely affected with most dealers heavily relying on State leasing programmes to stay afloat.
Kenya adopted the vehicle leasing programme in 2013 to access an increased number of well-maintained and utilised vehicles.
Since then, for instance, the country has leased several police vehicles in a move aimed at cutting costs and improving police mobility.