•Qualitative research data shows that dealers in used cars were forced to cut prices between February and March in response to depressed demand.
•The KUV Price Index started declining from September 2020 and is expected to continue to this until January 2020.
Second-hand cars prices fell by about 8.8 per cent in September on reduced disposable income and the approach to the year end, which locks eight-years old cars from the market.
A survey by online cars marketplace–Cheki and TIFA Research reflects a mixed performance in the cars market in the year to September, as Kenyans struggled with job losses in the wake of Covid-19.
Qualitative research data shows that dealers in used cars were forced to cut prices between February and March in response to depressed demand in an economy reeling from the effects of the Covid-19 pandemic.
For instance a car that would normally sale for Sh1.2 million saw its price reduce by about Sh105, 600.
“It should also be noted that many Kenyans lost their source income and were not able to service bank loans. Sale of cars seized by banks could have increased supply in the market, further putting downward pressure on prices,” the survey reads in part.
The price index stood at 110.09 in April with a growth of 42.22 from March. It maintained a slight change in July which stood at 120.54.
A price increase was further observed between July and August with a growth of 29.11 and stood at 149.25, before starting to fall in August.
“The KUV Price Index has started declining from September 2020 and is expected to continue to this until January 2020. This is normal as the traders await the year to end and the cars get older,” researchers reported.
December 31, is the last day for importing 2013 manufactured cars, meaning they attract a lower price as compared to 2014 made cars expected to come into the country starting January 1, 2021.
This is under the eight-year age limit rule for used cars where Kenya only allows vehicles of eight years old and below to be shipped into the country.
In addition to a downward trend in prices, there was also a downward trend in the number of listings of vehicles during the month of March 2020. This is also attributed to the effects of Covid-19 pandemic.
Significantly large declines were recorded for pick-ups, 4-wheel drives and SUVs, saloons, hatchbacks, buses, vans and mini vehicles.
The prices increases in between April and May 2020 were recorded on station wagons, coupes, and 4-wheel-drives/SUVs registering.
Imported second-hand vehicles account for 85 per cent of Kenyan car purchases, with Japan leading as the top source(85% of imports).
Other sources are United Kingdom, United Arab Emirates,Singapore and South Africa.
A used car is a vehicle that has previously had one or more retail owners. The growth of the internet has fueled the availability of information on the prices of used cars, according to Cheki.
Buyers spend an estimated Sh60 billion annually on the units, whose prices range from between Sh500,000 to an average Sh2.5 million.
SOURCE: https://www.the-star.co.ke/business/kenya/2020-12-03-used-cars-prices-fall-on-covid-effects-and-age-limit-survey/
