GM overtakes Toyota in new vehicle sales

Increased demand for buses and trucks helped General Motors East Africa (GMEA) overtake Toyota Kenya as the country’s largest car dealer by unit sales in the 11 months to November.  Data from the Kenya Motor Industry Association (KMI) shows that GMEA’s market share increased to 25 per cent at the end of November from 21 per cent as at June. This saw GMEA relegate Toyota to second place with a market share of 24 per cent from 25 per cent in June, piling pressure on the Japanese firm that has just replaced its CEO. Toyota sold 2, 669 units compared General Motor’s 2, 736, with more than 70 per cent of the sales coming from the heavy commercial vehicles in a period when dealers sold 11, 100 units, reflecting a 6.1 per cent growth compared to a similar period last year. “We have received a big boost from demand for our Isuzu buses, heavy commercial trucks and pick-ups,” said Rita Kavashe, the managing director of GMEA. “Between October and November, we managed to fulfil the large orders we had at the beginning of the year but which were delayed by the Japan earthquake that affected supply,” she said. The change in market structure has been attributed to the increased demand for commercial and public transport vehicles compared to a flat saloon car market where Toyota is heavily represented. Small dealers like Hyundai, Kenya Grange and Subaru Kenya also gained market share from three per cent in June to 10 per cent in November, putting pressure on established dealers such CMC Motors and Simba Colt who all shed their stakes. The saloon car market has in the past three years come under increased competition from imported second hand vehicles and lowers demand from companies and the government. This has hurt the market share of companies that rely heavily on this segment like Toyota and the troubled CMC Motors, whose market share dropped by the biggest margin to 12 per cent from 20 per cent in June.  CMC is gripped by boardroom wrangles that have led to the ouster of its chairman and suspension of its shares from trading at the Nairobi Securities Exchange (NSE). But the sale of trucks, pick-ups and buses has increased mainly due the change in Kenya’s transport policy and the increased economic activity that has boosted cargo movement in the transport, construction and agriculture sector. The government banned registration of on new 14-seater vans, watering the ground for dealers in buses such as GMEA. The drop in Toyota’s market share led to the replacement of South African Hylton Bannon as its head and the company has opted to head hunt for new managing director from Japan. CMC’s weak performance has mainly been driven by reduced orders from the government —its single biggest client— which has cut its transport budget by billions of shillings in the medium term. CMC sells a wide range of vehicle brands, including Land Rover, Range Rover, Ford, and Volkswagen Passat which the government picked in 2009 tol replace for fuel guzzlers such as Mercedes and Range Rovers. The dealer has warned investors that its profit for the year ended September will fall by more than 25 per cent.  Simba Colt, which owns the Mitsubishi brand, saw its market share drop marginally to 16 per cent from 17 per cent while DT Dobie—which runs the Mercedes franchise—gained from 12.2 per cent to 13 per cent. The growth opportunities in the commercial trucks market has drawn the interest of local dealers such as Toyota and Tata Africa —-which plan to assemble trucks locally to grow their market share. Dealers are bracing for tough times ahead, fearing that expensive loans would slow down demand since the bulk of their sales are hinged on bank credit. High cost of deposits and the tightening of liquidity by the Central Bank have seen most banks raise their base lending rates to about 24 per cent from a low of 14 per cent in January.

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