Kenyans defy market dynamics and are buying cars in record numbers despite steep prices

Kenyans are defying market dynamics and are buying cars in record numbers despite their prices steadily increasing.

Car sales grew by nearly a quarter in the first two months of the year despite cost of used vehicles rising by at least Sh100,000 ($1000) per unit.

The Kenya National Bureau of Statistics (KNBS) data indicates that Kenyans bought 13,598 new and second-hand vehicles between January and February, up from 10,981 units in a similar period a year earlier.

The bulk of imported cars were manufactured in 2011 and the rise in purchase prices during the first quarter slows demand.

Car prices normally tend to rise in the first quarter of the year as importers rush to secure newer vehicles to comply with the rule that bars importation of vehicles above eight years old.

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Charles Munyori, the secretary-general of the second-hand car dealers lobby Kenya Auto Bazaar Association, told a local daily that importers cut back on shipments during the first quarter due to the higher vehicle prices.

“The higher demand for 2011 cars came amid limited supply that pushed up prices by about Sh100, 000 per unit, as does happen in every first quarter. This will, however, ease off from April onwards until next year similar period, other factors held constant,” said Mr Munyori.

He said that cost of popular second-hand models like Toyota Belta (seven years old) from Japan is up to $8,000 (Sh800,000) from $6,500 (Sh650,000) in December excluding duty, freight and dealers margins.

The price of Nissan X-trail 2011 edition is up to $10,000 (Sh1 million). Mr Munyori said the 24 per cent upsurge in car sales – used and new units was among the highest in many years.

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KTBS data indicates that station wagons led the pack in sales at 8,384 units in the January-February period, having grown by nearly a third.

Vans and pickups followed having risen 14 per cent to 1,741 units while saloon cars dropped four per cent to 1,459 units and Lorry sales climbed to 1,455 units from 1,057 in the period.