Kenya Autos Report Q2 2012
Business Monitor International, March 2012, Pages: 44
Business Monitor International's Kenya Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Kenya's automotive industry.
Data from the Kenya Motor Industry Association (KMI) show that while the total new vehicle market grew 10% year-on-year (y-o-y) in 2011, the Japanese earthquake and tsunami had the biggest impact on the country's larger dealers. As a result, those that the association groups as smaller dealers saw their market share increase from 6.5% in 2010 to 10%, while their sales rose 69% compared with 6.1% growth for the combined larger dealers. General Motors East Africa (GMEA) offset some of the negative impact of restricted supplies for its Isuzu truck brand, however, through its domestic production, which underlines the advantages to be gained in an increasingly competitive vehicle segment.
According to data from the KMI, growth in the agriculture, manufacturing and trade sectors is driving demand for pick-up trucks, which accounted for 35% of total vehicle sales in the nine-month period. Sales of heavy commercial vehicles still account for 26.8% of the market, behind pick-ups. We also believe that construction projects in the region will fuel sales in the heavier segments over our forecast period. Further growth in Kenya's construction sector is forecast over the next two years by BMI's Infrastructure team, supporting the favourable conditions for the commercial vehicle segment. BMI expects growth in construction industry value to remain at roughly the same level as 2010 in 2011 and 2012, with industry value reaching KES159bn (US$2.1bn) by 2012. There could also be good news on the pricing front if the Central Bank of Kenya's monetary tightening measures result in the shilling's appreciation.
BMI has previously commented on the effects of a weakening Kenyan shilling on the country's used car segment and new data show the extent of the problem, with figures not expected to improve in the short term. Data from the Kenya National Bureau of Statistics show that used car sales for the eight months to August 2011 were down 20% year-on-year (y-o-y) to 33,073 units, from 39,790 in the same period of 2010 previous year.
Dealers have reported a 30% increase since the start of 2011 in the charges associated with importing used cars, including the exchange rate against the yen and US dollar and higher freight costs. The shilling reached a record low of below KES100.0/US$ on September 26 2011, and the Central Bank of Kenya expects sustained currency volatility over the next six months. Inflation has exacerbated the situation and, according to Kwame Owino, chief executive of the Institute of Economic Affairs, this has particularly hit the middle class, which is the biggest customer base for used cars.
Domestic production is one solution to such issues and Kenya is attracting investment, particularly from Chinese companies. Commercial vehicle manufacturer Beiqi Foton Motor launched its first domestically produced trucks in June 2011, after establishing a local subsidiary in the country in late 2010. The Foton Slip Double Cab pick-up truck was assembled at the Kenya Vehicle Manufacturers facility, where it will be assembled until Foton's own plant comes onstream. As part of a growing focus on Africa by Chinese auto companies, the company is building its own vehicle assembly plant, which is scheduled to begin operations in May 2012. Chery Automobile will be the next Chinese carmaker to invest in Kenya. According to Justus Nguu, director of Chery's local franchise holder Stantech Motors, Chery is now in negotiations with the Chinese government to secure financing of US$50mn for the Kenyan plant, which the carmaker plans to open in 2013.
Executive Summary
SWOT Analysis
Kenya Political SWOTs
Kenya Economic SWOTs
Kenya Business Environment SWOTs
Global Overview
Eurozone And EMs Pose Risks To 2012 Growth Outlook; US And Japan On The Rise
Table: Passenger Car Sales (Units), Jan-December 2011
Replacement Growth?
Business Environment Ratings
South Africa Leads New BMI Ratings
Table: Sub-Saharan Africa Autos Risk/Reward Ratings
Regional Overview
BMI Highlights Its Favourite Opportunities In Sub-Saharan Africa
Macroeconomic Forecast Scenario
Table: Kenya - Economic Activity, 2011-2016
Industry Forecast Scenario
Table: Kenya Automotives Historical Data & Forecasts
Competitive Landscape
Company Monitor
JLR Investment Targets Increased Buying Power
Country Snapshot: Kenya Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Consumer Expenditure, 2000-2012 (US$)
BMI Methodology
How We Generate Our Industry Forecasts
Automobile Industry
Sources
- JLR
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