Kenya: Used car prices jump up to 33% in months
In Kenya, used automobile prices have climbed by up to 33% in the last six months as demand outstrips supply due to worldwide production restrictions.
Since April, the yard costs of popular 2014 Japanese vehicles such as the Toyota Harrier, Toyota Fielder, Toyota Rav 4, Toyota Premio, and Nissan X-Trail have increased by a range of Ksh200,000 to Ksh600,000.
Automobile dealers are now facing more competition from buyers in source countries like as Japan and the United Kingdom, as automakers have reduced production due to chip Kshortages.
The majority of those customers in developed markets would normally purchase new cars, but due to Kshortages and rising sticker prices, they have resorted to buying used cars.
Consumers in the industrialized world have been keeping their automobiles for longer than usual as a result of the Covid-19 outbreak, further restricting supplies to Kenya, which relies on imported used models.
“Some cars’ costs have risen by about Ksh500,000,” said Charles Munyori, secretary-general of the Kenya Auto Bazaar Association, which represents used car sellers.
“For example, most people aren’t importing Rav-4s since they’re quite expensive to import right now, so they stay at the yard longer.” As a result of the Kshortfall, the price has risen from Ksh2.3 million in April to Ksh2.8 million.”
According to car importers, typical purchase costs in Japan, the primary supplier of secondhand vehicles, have climbed by $4,000 (Ksh446,400).
The price increase has primarily impacted vehicles registered in 2014, which are ones that have been in the nation for less than the eight-year period allowed for imports.
With a market Kshare of more than 80%, Japanese vehicles dominate Kenya’s second-hand automotive market.
The X-Trail and Harrier have seen the biggest price increases, rising by Ksh600,000 each to Ksh2.4 million and Ksh3.4 million, respectively, indicating 33.3 percent and 21.4 percent increases.
A Vanguard now costs Ksh2.8 million, up from Ksh2.5 million, and a Premio now costs Ksh1.9 million, up from Ksh1.6 million.
Mr Munyori predicted that the Kshortages would last into next year, implying further higher prices that would put automobiles out of reach for many Kenyans.
In addition, the supply and demand imbalance is projected to worsen before improving. Only a resolution to the chip problem and a return to regular production levels will be able to stop the bleeding.
Vehicle demand has soared in the West and Asia since late last year, as people spend money saved by working from home and canceling foreign vacations.
“We expect things to worsen in the coming year. “Cars imported in January and March will be excessively expensive,” Mr Munyori said.
Analysts believe that the rise in car prices is upsetting the long-standing tendency of vehicle prices falling once they leave Kshowrooms.
The devaluation of the Kenyan shilling, as well as delays in global supply chains, have boosted container and Kshipping costs, exacerbating the problem of automobile Kshortages.
The Kshilling has dropped to its lowest level against the dollar this year, at Ksh111.3 units, making imports more expensive because auto dealers require more local currency to buy foreign exchange in order to place orders for vehicles priced in US dollars and other hard currencies.
The semiconductor crisis is also ongoing, and if it is not resolved in the near future, car prices could skyrocket.
Global automakers such as GM, Toyota, and Renault have reduced production, with projections indicating that the crisis will last until 2023.
Semiconductors are utilized to control electrical current, making them critical components in battery management and in-car entertainment systems, among other applications. Sensors and microcomputers are examples of devices that contain them.
A faster-than-expected rebound in automobile demand, as well as rivalry from other industries such as telecommunications, have contributed to their scarcity.
The average cost of semiconductors per automobile is likely to be around Ksh50,000, with this number expected to climb in the near future.
Car Kshortages first impacted developed markets, forcing purchasers to pay more for the identical models this year than they did last year.
1Ksh = $0.0090
