East African vehicle market dominated by cheap cash purchases

31st May 2018

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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The most important consideration when buying a car (new or used) in Kenya is fuel efficiency – this according to the Deloitte Africa Automotive Insights report on East Africa, published this month.

Fuel efficiency is followed by safety and value for money.

Resale value is the least important factor driving the purchasing decision, indicating that vehicles are not purchased with selling them at a later date in mind.

New-vehicle sales in Kenya reached 11 886 units in 2017, says Deloitte Africa Automotive leader Dr Martyn Davies. The vehicle population numbered 1.4-million in 2015.

Like most African countries, the vehicle market in Kenya shows a strong contribution of used vehicles imported from abroad.

In Kenya, family and friends have the greatest influence on the purchasing decision, followed by country brand dominance.

The vast majority of vehicles in Kenya are bought cash, accounting for almost two-thirds of all purchases. This is largely owing to a lack of suitable financial products.

Only 29% of new vehicles were financed through bank loans.

Almost half of the vehicles purchased fell into the lowest price bracket of below $10 000.

Most vehicles are serviced regularly, shows the Deloitte report, but often by jua kali, or informal mechanics.

Only about one-quarter of vehicle owners take their vehicles to authorised dealerships.

The Kenya survey had 404 respondents.

In Tanzania, the survey had 405 respondents.

Around 5 300 new vehicles were sold in Tanzania last year. The total vehicle population was estimated at 400 000 vehicles in 2015.

As in Kenya, fuel efficiency is the most important criterion when purchasing a vehicle.

Resale value is the least important consideration.

Family and friends have the greatest influence on vehicle buyers.

More than half of Tanzanian consumers paid less than $5 000 in cash for their vehicles.

Cash and savings were the major source of vehicle finance, accounting for 66% of all purchases. The second most important source, at 16%, was a bank loan.

Again, the majority of vehicle owners service their vehicles regularly, but with informal mechanics.

Less than 10% of owners take their vehicles to authorised dealerships.

In Uganda, the survey had 359 respondents.

Ugandan vehicle owners value price more than anything else when making a purchasing decision.

Around 60% of all vehicles sold were priced below $5 000, with cash and savings the source of vehicle finance in 80% of all purchases.

Around 4 337 new vehicles were sold in Uganda last year, with the vehicle population in 2015 at around 500 000 vehicles.

South Africa sold more than 555 000 new vehicles last year.

 

 

Edited by Creamer Media Reporter

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