Demand for 2nd Hand Cars Pushes Prices Up By a Minimum of Ksh. 100,000/-

Official data shows that Kenyans bought 15,858 used vehicles in the first quarter of the year, compared to 14,346 units in a similar period of last year.

The rising cars appetite came in a period in which popular second-hand models like Toyota Belta (seven years old) imported from Japan increased to $7,000 (Sh721,000) from  $6,000 (Sh618,000) in December excluding duty, freight and dealers margins.

RISE IN DEMAND

The rise in demand for second-hand cars is a departure from the cut back in unit sales witnessed last year. New car sales dropped 27.3 per cent to 2, 687 units.

Dealers said the price surge was partly due to higher demand for Japanese models manufactured in 2010 as buyers raced to beat Kenya’s rule that only allows importation of cars under the age of eight years.

The weakening of the shilling against the US dollar in the review period also made imports expensive.

“There are two factors that contributed to the price increase; higher demand for 2010 cars than supply in Japan and the weakening of the shilling,” said Charles Munyori, the secretary-general of Kenya Auto Bazaar Association – a lobby group for second hand car dealers.

“We expect them to dip from this month when demands associated with eight year rule eases.”
All imported used cars must be eight-year-old or less.

IMPORTS FROM JAPAN

Kenya’s car market is dominated by low-priced second-hand imports from Japan.

The price of Nissan X-trail 2010 edition is up to $11,000 (Sh1.1 million), having shot up by about Sh200,000, according to dealers.

The Kenyan shilling traded at between Sh100 and Sh102 to the dollar last year compared to above Sh103 currently, pushing up import costs.

Overall, total car sales – used and new cars – grew 2.7 per cent to 18,545 units in the first quarter of the year, according to the Kenya National Bureau of Statistics (KNBS).

Second-hand cars comprised the bulk of the sales at 85.5 per cent while only 3,699 new cars were registered in the period.

Station wagons led the pack in sales at 11,005 units, followed by saloon cars (2,615) while vans and pickups bought in the period stood at 2,437, the KNBS data shows.