More than one year down the line and Kenyans are still reeling from the negative economic implications of the coronavirus pandemic. The local car import sector has not been left unscathed and despite the positive start to 2021, reports indicate that the challenges are far from over. The price of second-hand cars has risen by up to 29% or an equivalent of US$ 5,000 because of the new rise in the cost of buying cars from Japan. As the biggest supplier of used cars in Kenya, and commanding close to 80% of the used car market share in Kenya, this has been a major blow to many local dealers. Thanks to the economic uncertainty brought by COVID-19, people in other countries are keeping their cars for longer, thus limiting the supply and variety Kenyan importers had been accustomed to. Globally new car sales dropped by significant margins and Kenya was slightly luckier than other markets to witness only a 3% decline in 2020. Rising shipping costs between Kenya and Japan are also playing a part in the high import costs of car importation due to a scarcity of containers and ships. Newfound demand for specific products as a result of the coronavirus has completely shifted normal trade flows, leading to bottlenecks and causing empty cargo containers to be left stranded.
The fact that the Kenyan Shilling depreciated significantly against the dollar last year also played a significant role in the current price inflation in local car yards. Popular models such as the Toyota Fielder, Nissan X-trail, and Mazda Demio are prime examples of cars that cost between KES 100,000 and KES 5,000,000 more! The dwindling supply of used cars in the market, the struggling Shilling, and a hike in shipping costs are forcing many dealers to shift the burden to consumers in an already fragile economy that is yet to recover from the toll of the pandemic. Consumer patterns have also significantly changed as the primary buyers of used cars are now facing uphill battles of their own. Many small business owners have been forced to close shop and employees are being forced to make do with significant pay cuts. According to the Kenya Auto Bazaar Association Secretary-General, Mr. Charles Munyori...it is no longer practical for dealers to impart cars they will not sell.
Tech-Based Silver Linings for Car Dealers
They say never put all your eggs in one basket and this seems to ring true for Carhoot. By offering customers car import options from over five different countries, Kenyans are more empowered to broaden their scope, explore even more variety, and make better purchase decisions. The reason second-hand imports are so popular in the country is because of the assured documentation and the reduced wear and tear cars from better-developed countries have. With the help of dedicated agents, small dealers can use the app to service their clients by exploring import options from Singapore, Australia, South Africa, U.A.E, and the United Kingdom.