Car Sales Drop to Three-Year Low Amid Credit Challenges

Demand for cars in Kenya declined by 2.7 per cent in 2024, marking the third consecutive year of reduced sales.

According to data from the Kenya Motor Industry Association, car sales by local dealers dropped to 11,059 in 2024 compared to 11,370 in 2023. Total sales, including regional exports, stood at 11,352.

This was in stark contrast to 13,352 units sold in 2022 as the tough economic environment seen in the country continued to bite.

Industry analysts attributed the decline to the high costs of bank credit, which made it increasingly difficult for buyers to finance vehicle purchases from the 11 local dealers available in the country.

The high interest rates in Kenya were cited as a major challenge, particularly for consumers and businesses relying on loans to acquire new vehicles.

“Interest rates went up by 20 per cent, making it difficult for some customers to purchase new vehicles,” noted Isuzu East Africa Managing Director Rita Kavashe. 

This has prompted stakeholders in the motor vehicle industry to call for urgent and stringent measures to address the cost of borrowing.

The drop in domestic sales has in turn led to an increase in second-hand vehicle imports, mainly due to their affordability as compared to brand new vehicles. 

Trucks, double and single-cabin pickups, buses, and prime movers were the best-selling categories. 3,939 trucks, 3,133 pickups, 1205 buses, and 522 prime movers were sold.

Dig Deeper: The harsh economic climate led to the country experiencing a 4.8 per cent decline in real GDP growth in the first half of 2024, down from 5.5 per cent in the first half of 2023.

Further, the Third Quarter Gross Domestic Product Report 2024 by the Kenya National Bureau of Statistics revealed that the Kenyan economy is at its slowest rate of growth in four years. This was due to decelerated growth in most sectors of the economy.

Also, despite the inflation rate hitting a 14-year low of 2.7 per cent in October, the cost of living remained high with the commodity prices remaining elevated. 

Despite the decline in overall vehicle sales, dealers remained hopeful that the economic situation may improve in 2025, particularly in the construction sector, where demand for raw materials and vehicles is predicted to pick up.