Kenyans are now opting for third generation cars traded locally, latest industry trends show, amid reduced global production of units and soaring prices.
Global motor vehicle production has been hit by a shortage of chips, also known as semiconductors since last year.
The shortage has been worsened by the ongoing Russia-Ukraine conflict, industry players say. The two are key exporters of raw materials used in the manufacturing of various microchips.
This includes palladium heavily used in making memory and sensor chips, where Russia accounts for 45 per cent of the global supply.
The shortage is expected to continue into the second-half of the year.
This has forced automakers to cut production since they cannot access enough chips to power latest technology models, where most electronic components require the material to function.
Used cars owners in Kenya’s source markets like Japan, Singapore, and the UK are now holding on to their vehicles longer due to the shortage and the rise in prices.
There has also been a shortage in vessel availability and rising global demand for used cars occasioned by reduced disposable income since the pandemic struck.
This has led to a high demand against low supply leading to the hike in prices of new and used cars, which have increased by between 50 and 80 percent in Kenya.
Monthly second-car imports which account for 80 percent of vehicles on the Kenyan roads have dropped to below 3,000 from the normal average of 5,000 to 7,000.
“Production is slow because of the conductors’ shortage. This has affected prices as demand remains high,” Car Importers Association of Kenya (CIAK) National Chairman Peter Otieno told The Star yesterday.
The price of an imported used Mazda Demio, 1,500 ccs, is nearing the Sh1 million mark, currently retailing at between Sh700,000 and Sh900,000.
This is up from between Sh500,000 and Sh600,000.
The asking price for a Toyota Premio is averaging between Sh1.6 million and Sh2.5 million depending on the engine capacity, CIAK notes, from a low of Sh1.2 million.
Used Nissan X-Trail imported into the country is selling at above Sh2 million from an average Sh1.5 million two years ago. New models are fetching up to Sh4.4 million.
Toyota Axio is selling at about Sh1.4 million on average, up from an average of Sh1 million.
The price jump has also been riven by the strengthening US dollar, which has seen importers spend more in buying the currency for trade.
Yesterday, Kenya Auto Bazaar Association (KABA) reported an increase in the demand for third-generation cars (second-hand cars that have been used locally) at the weekly Jamhuri Auto Bazaar, with prices going up to 30 percent.
“Demand is very high because prices of second-generation vehicles have shot up. People are going for local units which are being sold by the third, fourth owners. This has also impacted the prices of these cars being sold at the bazaar,” KABA chairman John Kipchumba said.
A locally used Toyota Probox is currently going for about Sh700,000 from a low of Sh400,000 while an imported used one is priced at Sh1 million on average from about Sh700,0,000.
The bazaar attracts about 2,000 second-hand cars and 3,000 customers every Sunday.
Another substitute for imports is the refurbishing of old and abandoned cars by local mechanics and workshops, KABA notes, a trend expected to be witnessed in the medium term as buyers watch the prices of imported units.