New vehicle sales for March drop by 14pc as high cost of living bites
By Steve Umidha, April 24, 2023
The auto industry has posted another slump in local sales as it continues to feel the pinch of a harsh economic environment.
Kenya Motor Industry Association (KMIA) figures show car sales fell by 14 per cent year–on–year last month.
The industry sold a total of 2,758 units by the end of March, 445 units less than it managed in a similar period last year.
The association attributed the low retail sales numbers to a difficult quarter borne from the brunt of an uncertain economic environment, sending ripples through the auto sector, which has largely dodged a significant hit from inflation this year in comparison to other sectors.
Economists feel the slackened economic growth has everything to do with the lingering war between Russia and Ukraine that has caused supply chain bottlenecks and driving up costs for everything from labour to raw materials.
However, industry experts are optimistic despite the low numbers and are confident that the situation will mend on political stability, availability of credit by banks, and other financial institutions, as well as improving economic macro indicators.
“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,” Managing Director of CFAO Motors – formerly Toyota Kenya Ltd, Arvinder Reel said in a recent telephone interview with Business Hub.
Market value
Macroeconomic indicators like the gross domestic product (GDP) ¬– a monetary measure of the market value of all the final goods and services produced and sold in a specific time period – are statistics or data readings that reflect the economic circumstances of a country or sector.
They are used by analysts and governments to assess the current and future health of the economy and financial markets. Other factors like interest rates, unemployment rates, disposable income, and exchange rates ordinarily affect the growth and performance of the automotive industry.