The Covid-19 pandemic seems to be hitting Kenyan citizens selectively as the wealthy have managed to keep orders for luxury cars high. Despite the much talked about financial crisis in the country, orders for Mercedes and BMW have in fact seen a 14.5 per cent increase in the last six months.
The Kenya Motor Vehicle Industry Association (KMI) reported that BMW and Mercedes saw a rise in the orders for high-end cars to 79 units in the review period compared to 69 units same period, a year earlier.’
As the luxury car sales increased, the entire new vehicle market in comparison, fell 26.4 percent to 4,628 units from 6,294 units
The data shows that rich households and private companies increased their spending when most businesses suffered and many Kenyans experienced declines in their income. Spending on luxury cars obviously defied the economic slowdown in the country.
Luxury cars typically range between Sh6 million to Sh20 million, with a few models costing more than30 million.
Mercedes cars saw the highest rise, from 24 to 37, while BMW sales rose from three to 14.
However, Land Rover sales, Range Rovers included, fell from 22 to 18, Bentleys from three to one and Porsche from 10 to one.
Despite the luxury car market thriving, the rest of the market, including common commercial vehicles, saw a dip in response to the gasping economy.
“The year 2020 started well, as the industry built on the momentum from 2019. However, there was a drastic drop from March to May due to the Covid-19 effect on the economy,” Arvinder Reel, the managing director of Toyota Kenya, said in a recent interview.
The imposed travel restrictions and closure of schools greatly contributed to the sales of commercial vehicles.
“Overall, sales of commercial vehicles (pickups, 14-seater minibuses, trucks and buses) contributes 50 per cent of total new vehicles market,” Mr Reel said.
“Unfortunately, this is the segment that has been the most affected due to the restriction of travel/movement and lockdowns of the major towns.”
Cargo transporters and public service operators sales were hurt by the travel restrictions imposed in the country, leaving them with excess capacity and reducing their need to expand their fleets.
The average monthly sales in the first half of the year dropped to 771 units compared to 1,049 units a year earlier.
The lowest sales were experienced at 568 units in May and then rose to 762 in June, with dealers hoping to maintain the upward trend if the economy remains open.
“We are optimistic that this positive trend will continue as the national government puts in place guidelines that will help in re-opening the economy,” Mr Reel said.
An upsurge in sales is critical in avoiding job losses in the industry and lower revenue for the taxman.
The Kenya Revenue Authority collects billions of shillings annually from motor vehicle sales through a variety of taxes.