Kenyans are shunning popular Toyota car models on the back of high cost that has seen even dealers cut down on imports of these vehicles.
Car dealers say more Kenyans are going for vehicles such as Nissan Sylphy and Mazda, which cost less compared with popular models such as Toyota Premio and RAV4 that have been synonymous with middle-income earners over the years.
Charles Munyori, the secretary-general of Kenya Auto Bazaar Association, says Sylphy and Mazda Axela and CX5 are now becoming popular with Kenyans.
Mr Munyori said the price of Toyota Premio has short up to Sh2.2 million currently from Sh2 million in February while RAV4 is going for Sh3 million from Sh2.8 million four months ago.
Nissan Sylphy (Blue Bird) is now selling for Sh1.5 million with Mazda Axela going for at least Sh1.6 million, making them affordable to most Kenyans at a time when households are struggling with the rising cost of other goods.
“We are seeing a shift where Kenyans are now moving from the popular brands such as Toyota Premio and RAV4 to other models. This shift has been occasioned by the high cost that these cars are now fetching at the market,” said Mr Munyori.
Buyers are finding these brands, which are relatively cheaper and good, to be the best alternatives to their preferred models.
Vehicles from Japan dominate the Kenyan second-hand segment with a market share of more than 80 percent.
The Japanese vehicles are preferred by buyers who say these cars’ spare parts are easier to obtain locally than those of other brands.
Buyers also believe that the resale value of Toyota vehicles are higher than that of brands such as Nissan.
Need for importation
“In fact, most of the car dealers are hardly bringing in Premio and RAV4 models because they are not moving and they will tie up money that they would need for importation of more vehicles,” he said.
The rising cost of vehicles in the country has been linked to a shortage of electronic chips in Japan, the unavailability of dollars locally and a weakening shilling against the greenback.
Automakers have scaled down production on the back of shortages of these semiconductors used in electronic devices.
Mr Munyori says the dollar shortage has been so extreme that they have to wait for at least three days to get $20,000 from the banks.
“We have to wait for like nine days in order to accumulate $80,000, and this has seen car dealers delay in making their orders. We are really feeling the impact of the dollar shortage in the market,” Mr Munyori said.
Banks have imposed caps on dollar purchases, making it difficult for some to obtain adequate forex to meet their obligations.
This has forced industrialists to start seeking dollars in advance as the shortage puts a strain on supplier relations and the ability to negotiate favourable prices in spot markets.
Some industrialists have already been hit by shortages which are threatening to strain their relations with suppliers and injure the ability to negotiate favourable prices in spot markets.
Others have, however, managed the shortages with their bankers, but fear they could be hit in coming months if the mismatch persists.
The shilling has remained weak against the dollar and this has made it costly for importers shipping in goods. The shilling has hit a record low trading against the dollar, after it weakened to 117.06, indicating a continued rally in prices of imported goods and signifying a further dollar shortage crisis.
The depreciation is attributed to increased demand for dollars from importers, especially crude oil and merchandise traders. It is set to increase prices of imported goods and put pressure on the country's debt repayment given that most external debt is repaid in the dollar.
This story was first published in the Business Daily.