Kenya: Used car prices have increased 30% in the past three months
Used car prices in Kenya have risen by up to 30% in the past three months due to a weak shilling, a shortage of automobiles, and increased shipping expenses, putting low-end models like Vitz beyond Sh1.2 million.
Popular 2015 Japanese vehicles including the Toyota Harrier, Toyota Fielder, Toyota Premio, and Nissan Sylphy have risen between Sh150,000 and Sh400,000 since April, according to Kenya Auto Bazaar Association.
Cost-conscious buyers are canceling orders and switching to Nissan and Mazda.
As automakers cut output due to semiconductor shortages, dealers face greater competition from Japan and the UK.
Most purchasers in developed countries would normally buy new automobiles, but shortages have forced them to buy used ones.
As if that weren’t enough, the weakening shilling versus the dollar has increased transportation costs, raising the cost of imported goods.
Used 2015 Mazda Demio costs Sh1.3 million, up 30 percent from Sh1 million in March, while Toyota Vitz costs Sh1.2 million, up 26.3%. Kenya Auto Bazaar Association Secretary-General Charles Munyori predicts that prices would likely rise in the coming months.
“The weak shilling has affected the industry, and a Vitz that cost Sh1 million before now costs Sh250,000 more,” Mr. Munyori added.
Kenyans shouldn’t expect prices to drop soon unless a miracle strikes.
From April through December, automobile prices typically dip. But traders say this year is different.
“The market will stabilize once Asia and western nations produce more new automobiles. Mr. Munyori added, “This takes time.”
A worldwide scarcity of computer chips, copper, aluminum, and cobalt required in automotive manufacture has led to fewer new cars.
More customers are flocking to secondhand automobiles, driving up costs at record rates.
The price shock has hurt individuals and corporations that acquire automobiles with bank loans for vehicles less than eight years old and repay the debt within four years.
Those registered in 2015 are inside the eight-year import window. More than 80% of Kenya’s used cars are Japanese.
2015 Honda Fits now cost Sh1.3 million, up from Sh1.15 million in March, while Nissan Sylphys now Sh1.4 million, up from Sh1.25 million.
Mazda Demio, Honda Fit, and Vitz are popular with ride-hailing applications like Uber and Bolt, and rising pricing will impact many young people looking to enter the transportation industry.
Used Mercedes Benz C-200 2015 model prices have risen by Sh0.5 million to Sh2.7 million, while Toyota Premio prices have risen to Sh2.2 million from Sh1.6 million.
A 2015 Land Cruiser ZX (petrol engine) now retails for Sh9.5 million, up from Sh8 million in March, delaying sales of the luxury vehicle as Kenyans approach the August 9 General Elections.
The falling Kenyan shilling and global supply chain constraints have boosted container and shipping prices.
The shilling concluded trading at Sh117.90 versus the dollar on Friday, up from Sh114.95 in April and Sh107.85 a year earlier. This makes imports more expensive since auto dealers require more local currency to acquire foreign exchange to place orders for foreign-currency-quoted cars.
Traders said dollar demand from several industries outpaced inflows.
“Shipping takes longer and is more expensive since most shipping companies prioritize brand-new vehicles,” said Mr. Aleri.
High shipping costs and supply issues have delayed March car orders, dealers claim.
The value of automotive imports declined in the three months ending March compared to the same time the previous year due to increased unit costs.
Kenya imported automobiles totaling Sh18.53 billion from January to March, down from Sh23.16 billion a year earlier.