Car prices have fallen by up to 20 per cent following a drop in demand as prolonged political instability exerts a heavy toll on the economy.
Kenya Auto-Bazaar Association (Kaba) secretary-general Charles Munyori said second-hand dealers were struggling with dormant stocks, forcing many to cut prices to rev up sales.
Potential buyers have in recent months adopted a wait-and-see attitude in a slowing economy where money circulation has shrunk to new lows, with most banks unwilling to finance salaried employees.
“No bank is willing to guarantee workers on the basis of their payslips as most employers are talking of layoffs,” Mr Munyori said.
Official data shows that car imports dropped by 16 per cent to 21,584 in the three months to September, when Kenya was preparing for the General Election and later the repeat presidential poll.
“We have been forced to sell at throw away prices as people don’t want to spend due to political instability,” said Mr Munyori.
“Bad politics translates to bad life. That is what we in the industry are experiencing now and even those who we get cars from are suffering. Where we used to sale 100 units we are now selling 60, we are making losses.”
He said that a Toyota Belta model is retailing at about Sh700,000 down from Sh850,000 early in the year. A Mazda Demio is now going for between Sh550,000 and Sh600,000, down from Sh680,000, while a Toyota Prado that went for Sh3.8 million is now down to Sh3.4 million.
Private sector activity dropped to a record low in October on political jitters, a recent survey from Stanbic shows.
The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) for manufacturing and services slumped to 34.4 from 40.9 in September, its lowest since the analysis began in January 2014.
“The heated political temperature has resulted in a challenging couple of months for Kenya’s private sector,” said Jibran Qureishi, an economist for East Africa at Stanbic Bank.
Output has contracted for six straight months, according to the PMI, and Mr Qureishi said last month’s drop was the sharpest since the series began, as output, new orders and employment contracted.
The Treasury has cut its 2017 growth forecast to five per cent from six per cent.
A slowdown in private sector credit growth, mainly caused by a cap on commercial lending rates, has offered another drag to the economy in the run-up to the election — further dimming the outlook for auto dealers.
The Opposition Nasa has announced a boycott of products by telecoms giant Safaricom, dairy firm Brookside and cooking oils and detergents maker Bidco. Nasa has vowed not to recognise President Uhuru Kenyatta’s victory in the presidential poll, setting the stage for a prolonged period of uncertainty.