New car sales hit 2025 low in May as government spending, economic strain weigh on market
New data from the Kenya Motor Industry Association shows that major car dealers sold 988 units in May, down from 1,015 units in April.
Kenya’s new vehicle sales dropped in May to their lowest level this year, as dealers faced reduced government spending and a challenging economic climate.
Fresh data from the Kenya Motor Industry Association (KMI) shows that major new car dealers sold 988 units during the month, falling from 1,015 units recorded in April.
This continued the downward trend from March’s 1,202 units, which remains the highest number of sales so far in 2025.
The data captures performance by 11 key dealerships across the country.
Vehicles assembled locally from imported parts, referred to as completely knocked down (CKD) units, made up the bulk of these sales. Some of these vehicles are exported to neighbouring countries, though in small numbers.
While May’s sales were the lowest this year, they still surpassed the 958 units sold during the same month last year.
“In total, 5,301 vehicles were sold between January and May this year, representing a 27.6 per cent rise from 4,154 units sold during the same period in 2024,” reads the report.
In the first two months of the year, dealers moved 1,008 units in January and 1,088 in February.
Lending rates
The decline in monthly sales has come even as interest rates on loans have been falling.
The Central Bank of Kenya (CBK) has been easing its monetary policy to encourage lending and support business recovery. Lending rates have dropped steadily from 13 per cent in June last year to 9.75 per cent this month.
On June 10, CBK signalled further relaxation of its policy, aimed at boosting access to credit and spurring economic activity.
The Monetary Policy Committee, which sets the base rate, cut the Central Bank Rate (CBR) by 25 basis points—from 10.00 per cent in April to 9.75 per cent.
“Growth in commercial bank lending to the private sector stood at 2.0 per cent in May 2025 compared to 0.4 per cent in April, and -2.9 per cent in January 2025. This reflects improved demand in line with the declining lending interest rates,” CBK Governor Kamau Thugge said.
Average lending rates by commercial banks fell to 15.4 per cent in May, down from 15.7 per cent in April and 17.2 per cent in November 2024. Companies relying on asset financing by banks remain the key drivers of new car purchases.
However, the general slowdown in the government’s vehicle leasing programme and subdued private sector activity have weakened the overall demand.
Dealers say pending bills owed by the government to suppliers have hurt cash flows, delaying project implementation and, by extension, the acquisition of new vehicles.
Market leader Isuzu, which accounts for 48.4 per cent of new vehicle sales in the country, noted that these conditions have negatively affected procurement patterns across the board.
Top Stories Today
Reader Comments
Trending
