New car sales hit record high on rising demand

Corporate News

Porsche Middle East and Africa regional operations manager Adrian Wayne (left) and Multiple Group chairman Rajinder Baryan pose next to the new Porsche Macan sports car during its launch in the Kenyan market last September. PHOTO | FILE 

By VICTOR JUMA, vjuma@ke.nationmedia.com

In Summary

• New vehicle dealers sold 17,499 units in 2014, marking a new high since the liberalisation of the local motor trade in the 1990s that allowed for import of used cars.
• The number of units sold last year is 20.3 per cent more than the previous peak of 14,542 units recorded in 2013.
• Dealers in luxury cars such as Porsche, Mercedes, BMW and Ranger Rovers recorded the highest jump in sales at 58.4 per cent to move 393 units last year.

Rising demand for luxury cars and increased orders for commercial vehicles pushed new motor vehicles sales to a record high last year, reflecting wealthy Kenyans’ growing penchant for high-end goods and vibrant economic activity.

Data from the Kenya Motor Industry Association (KMI) shows that new vehicle dealers sold 17,499 units in 2014, marking a new high since the liberalisation of the local motor trade in the 1990s that allowed for import of used cars.

The number of units sold last year is 20.3 per cent more than the previous peak of 14,542 units recorded in 2013.

Dealers in luxury cars such as Porsche, Mercedes, BMW and Ranger Rovers recorded the highest jump in sales at 58.4 per cent to move 393 units last year, also marking a new record of high-end auto sales.

“The new motor vehicle market did exceptionally well last year due to demand from the expanding middle class and businesses in multiple economic sectors like construction that are growing fast,” said Rita Kavashe, the CEO of General Motors East Africa (GMEA).

The high demand for luxury cars, whose prices can top Sh20 million, has been linked to increased spending among the country’s super rich and upper middle class buyers.

The makers of Porsche opened the Nairobi office in May last year to tap a growing demand.

They spent over Sh1.8 billion on 125 units of the brand last year, paying an average price of Sh15 million for the high performance cars that previously did not have a local dealer.

“We are selling to rich people and the middle class with large salaries,” a Porsche official told the Business Daily.

The orders saw the dealer emerge with the largest share of 32 per cent in the luxury market, relegating the hitherto dominant DT Dobie to second place with a 27 per cent.

Dealers say the rising demand from wealthy individuals and private companies has more than compensated for the government ban on luxury cars in the public sector, which, however, also continues to be flouted.

Sales of the high-end cars had slumped from their peak in 2009 when the government — previously accounting for more than a quarter of orders — introduced a policy in favour of lower-maintenance makes, including Volkswagen.

READ: Porsche pulls ahead of Mercedes in Kenya sales

The 393 units sold last year, however, mark a strong recovery, having outpaced the 2009 sales of 218 units by a large margin.

A recent global survey of the wealthy found that Nairobi has 5,000 dollar millionaires, with their number expected to reach 8,100 by 2020.