Motor vehicle imports 7pc setback due to the Covid-19 pandemic

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According to data from the Kenya Revenue Authority (KRA), the imports of new and used motor vehicles shrank by 7 percent in the year ended December 2020. In the previous year, the units stood at 92, 120 and in 2020, the imports stood at 85, 624.

As the Covid-19 pandemic hit, strict measures were put in place to control the spread of the virus which led to a sharp decline in the auto-imports industry during the first half of the year.

During the six months up until June 2020, the units imported by 30.2 percent to 34,054 whereas, during the first six months to June 2019, the imports stood at 48,839. In Kenya, 88 percent of all the vehicles are second-hand models.

“The first half was tough because the panic and economic disruption reduced demand for vehicles,” said Charles Munyori, the secretary-general of the Kenya Auto Bazaar Association which represents used car dealers.

The health measures that were put in place due to the pandemic led to unfavorable consequences such as the closure of businesses and the loss of more than one million jobs. This effect trickled down to affect the trading of vehicles.

However, as the government eased the restriction in July 2020, the import business began to bounce back in the second half of the period under review.

During the six months ended December 2020, the vehicle imports shot up by 19.1 percent to 51,570 units; during a similar period in 2019, the vehicle imports stood at 43,281 units. This helped bounce back from the decline that took place in the first half of 2020.

The 2020 imports stood at a 7 percent decline comprehensively.

The market forces, increased consumer and business confidence boosted the increase in imports during the second half of the year ended December 2020.

“Prices of vehicles in the international markets declined significantly because of reduced demand. Big dealers took advantage of this and imported more units expecting recovery in demand,” Mr. Munyori said.

The new vehicle dealers outlined a 16 percent sales decline to 11,086 units in 2020 as opposed to 13,199 units in 2019.

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Anthony Kiratu is the Founder of Finsolutions. He is a financial analyst with over 5 years experience in research, investment advisory, valuation and financial modelling. Anthony is a member of the Institute of Certified Investment and Financial Analysts and Institute of Certified Public Accountants of Kenya. He is passionate about development of African Capital Markets through training of investors and dissemination of information for sound financial and investment decision making process. He is also a part-time lecturer in the Certified Investment and Financial Analyst course in the subjects of International Finance, Portfolio Management, Equity Investment Analysis, and Fixed Income Securities. Email: anthony@finsolutions.co.ke Contact: +254 780216631

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