New vehicle sales surge 25 per cent in early 2025, fuelled by affordable credit

Dealers of new vehicles have had a good half-year run in 2025, as sales for the year-to-June jumped 25 per cent compared to last year.

Latest industry numbers by the Kenya Motor Industry Association (KMIA) shows the 11 local dealers also serving regional markets sold 6,360 units in the six months, compared to 5,086 sold over same period last year.

The Kenyan market took the lion's share of these units, where 6,254 vehicles were sold locally, up from 4,982 same period last year, a 25.5 per cent growth.

The strong performance has since been pegged on the stable interest rates and strong performance in key sectors of the economy, mainly agriculture, building and construction, transport and logistics and service sectors.

This is reflected in the vehicle categories most sought, where trucks composed the highest number of unit sales during the period (2,577), followed by pick-ups (1,344 units comprising 830 single cabins and 514 double cabins).

Dealers also sold 686 buses during the period with the matatu industry remaining a major off-taker, while prime movers sold total 432 units.

Isuzu East Africa retained its dominance with a total of 3,075 units sold (43.3% of the total industry sales). CFAO accounted for 31.7 per cent with 2,017 units with Simba Corporation (ex-Simba Colt Motors) closing the top three in dealership with 547 units.

“Call stable interest rates, agriculture growing because of increased productivity and affordable fertiliser. Construction projects creating demand for sand and building materials,” Isuzu East Africa managing director, Rita Kavashe, told the Star.

CFAO Mobility Kenyamanaging director Arvinder Reel also pegged the firm’s sales on a rebound in key sectors of the economy.

“The market has bounced back and we at CFAO have had a very good first half on the account of Land Cruiser and HiAce sales,” Arvinder Reel told the Star.

Central bank of Kenya has since June last year been making downward adjustments on the banking sector base-lending rates to spur credit to the private sector and households.

The rate has since dropped to a two-year of 9.75 per cent from a high of 13 per cent in June last year.

Growth in commercial bank lending to the private sector stood at two per cent in May 2025 compared to 0.4 percent in April, and -2.9 percent in January 2025, according to CBK.

“This reflects improved demand in line with the declining lending interest rates. Average commercial banks’ lending rates declined to 15.4 percent in May 2025, from 15.7 percent in April and 17.2 percent in November 2024,” Governor Kamau Thugge said.

Second-hand imports, however, remain the most preferred vehicles in Kenya, mainly by households, due to their affordability compared to new ones.

Monthly imports range between 8,000 and 12,000 with Japan accounting for about 80 per cent of these units. Other key sources are UAE, UK, Singapore and South Africa. 

According to the Car Importers Association of Kenya (CIAK), new units which are locally assembled or full-built imports are expensive by more than Sh600,000, compared to imported used cars where some are even more superior than the new ones.

The country imports about 130,000 second-hand vehicles annually at about Sh60 billion, with used cars enjoying 85 per cent of the market share.