Wealthy Kenyans sell luxury vehicles as Covid hits incomes

Toyota Land Cruiser Prado (Land Cruiser 150.

Wealthy Kenyans have been racing to dispose of their high-end cars in the wake of Covid-19 economic hardships, online listing of vehicle sales shows. Findings of a Tifa Research survey released on Wednesday show that 34.4 per cent of the 151,000 cars listed for sale on Cheki — a car selling website — are sports utility vehicles (SUVs) and four-wheel drive models that are associated with the rich and middle class Kenyans.
The models include Toyota Prado,

Toyota Harrier, Vanguard, Nissan X-Trail and the Subaru Forester that have high maintenance and fuel costs. ”The rush to dispose of the fuel-guzzling models came in period when financial misery engulfed many people amid the economic fallout from the Covid-19 pandemic and the restrictions imposed to contain the spread of the virus.

Workers have been hit with layoffs or unpaid leave and pay cuts for those retained, while a number of business people shut down amid a collapse in sales. “We anticipate this is due to the high number of people wishing to sell SUVs and four-wheel drives because of the Covid-19 hardships. Remember that we are also seeing more listings of auctioneers in the papers due to loan defaults,” Tifa Research CEO Maggie Ireri said on Wednesday.

Station wagons are the second highest number of second-hand cars listed for sale on the websites at 19.5 per cent followed by hatchbacks (18.5 per cent) and saloon cars at 17.7 per cent. Models under the Toyota brand dominate the Kenyan second-hand car market, controlling more than 80 per cent of market share, followed by the Nissan and Subaru brands.

The high number of SUVs and four-wheel drives put up for sale coincides with a rise in loan defaults. Workers and businesses have defaulted on loans worth Sh53.95 billion since the onset of the coronavirus restrictions in March, paving the way for blacklisting of thousands of borrowers with credit reference bureaus (CRBs) from January.

Central Bank of Kenya (CBK) data shows that non-performing loans (NPLs) rose to Sh403.9 billion in October, up from Sh349.9 billion at the end February — the sharpest eight-month increase in recent history. ”The rise in defaulted credit has triggered a jump in property auction as banks move to seize assets from defaulters in a year when a majority of top lenders are expected to issue profit warning due to costs linked to bad loans.

About 1.72 million workers lost jobs in the three months to June when Kenya imposed a coronavirus-induced lockdown in selected counties that led to layoffs and pay cuts. ”The rise in the number of high-end car models put up for sale also comes amid plunging purchase orders due to reduced cash flow.

Kenyans faced with Covid-19-linked hardships have gone slow on luxury spending. New vehicle registrations dipped 33 per cent to 52,999 in the nine months to September from 79,078 in a similar period last year, data by the Kenya National Bureau of Statistics (KNBS) shows. But the cost of imported second-hand cars has jumped by up to 12 per cent or Sh500,000 per unit over the past three months, propped up by the weakening of the shilling to historic lows against the dollar.

The shilling on Tuesday traded at Sh110.15 units to the US dollar from Sh106.4 in June and Sh102.3 in March — prompting the importers of items like cars, fuel, second-hand clothes and industrial machinery to pass the additional costs to consumers.

Source: Business Daily Africa,