Shocking Drop:
What’s Driving This Automotive Market Crash—and What It Means for You
Why Are Kenyans Buying Fewer New Cars in 2025?
In a startling shift, Kenya’s new car sales have dipped below 1,000 units a record low not seen in recent years. For a growing economy like Kenya’s, this sharp drop isnot just a number it’s a red flag for consumers, dealers, policymakers and investors. However what’s really behind this nosedive in the auto industry? Is it high taxes, skyrocketing living costs or changing buyer preferences?
Let’s dive deep into the causes consequences and what this trend reveals about Kenya’s economy and mobility upcoming.
Kenya’s Auto Market in Freefall: Sales Data Reveal Alarming Trends
According to the Kenya Motor Industry Association (KMIA), new car sales dropped to only 981 units in the latest monthly report down from over 2,500 units at the same time last year. This over 60% year-on-year drop paints a bleak picture for the Kenya automotive business in 2025.
Key Kenya Car Sales Statistics 2025:
- New vehicles sold: 981 units (May 2025)
- Year-on-year change: -61%
- Historical average: 1,800–2,500 units per month
- Greatest affected segments: Sedans, pickups and light commercial vehicles
What’s Causing the Car Sales Drop in Kenya?
Several converging factors are behind the unprecedented decline in motor vehicle sales in Kenya:
1. High Vehicle Import Taxes & Duties
Recent changes to the Kenya Revenue Authority’s vehicle import duty structure have significantly raised prices. Over some taxes hitting up to 100% on luxury and over-1500cc engines most Kenyans are priced out of the new car market.
2. Kenya’s Economic Pressures
From shilling reduction to great inflation (currently at 8.7%), the average Kenyan household is prioritizing basic needs over car ownership.
3. Surging Fuel Prices
The cost of fuel in Kenya has move up to KSh 205 per litre (petrol, as of June 2025), adding ongoing working costs that deter new car ownership.
4. Move to Used Cars
Through second-hand imports priced significantly lower, the used cars vs new cars Kenya debate leans heavily toward affordability. Popular options under KSh 1 million are flooding online marketplaces and car yards.
5. Decreasing Government Procurement
A freeze on state vehicle procurement, part of government austerity measures, has wiped out a major chunk of institutional buyers.
Expert Insight: Is Kenya’s Automotive Industry in Crisis?
“This isn’t just a sales slump it is a structural market correction,”
says James Mwangi, economist at the Institute of Economic Affairs (IEA Kenya).
Kenya Car Industry Performance Report Highlights:
- Dealerships report up to 45% decline in showroom traffic
- Local vehicle assembly plants like Isuzu East Africa face production slowdowns
- Financing institutions are seeing a spike in loan defaults and fewer car loan applications
How Does Kenya Compare with East African Neighbors?
| Country | Monthly New Car Sales (2025 avg) | Major Drivers |
| Kenya | 981 | High tax, weak currency |
| Tanzania | 1,430 | Incentivized imports |
| Uganda | 1,010 | Lower registration fees |
| Rwanda | 800 | Growing middle class |
While East Africa’s car sales trends show resilience in neighboring countries Kenya is clearly the regional laggard.
Regional Spotlight: Nairobi, Mombasa & Kisumu Trends
- Nairobi: Dealers report a 70% fall in footfall
- Mombasa: Vehicle import businesses scaling down due to lower port clearances
- Kisumu: Demand shifting to boda bodas and used vans for SMEs
What This Means for Buyers and Sellers
For Consumers:
- Now is a excessive time to negotiate discounts on unsold stock
- Consider financing plans carefully; interest rates have increased to 16%
- Used cars under KSh 1M offer improved value for price-sensitive buyers
For Dealerships:
- Pivot toward used cars and trade-ins
- Embrace digital marketplaces and funding partnerships
- Explore fleet leasing for SMEs to drive demand
FAQs
Why are new car sales rising in Kenya?
Due to high import taxes, economic challenges, growing fuel prices and a preference for extra reasonable used vehicles.
How numerous new cars were sold in Kenya in 2025?
As of the latest data fewer than 1,000 new units were sold in a single month.
Are car dealerships in Kenya closing?
Several small dealerships have closed or shifted focus to used cars due to reduced new car demand.
What are the maximum affordable new cars in Kenya in 2025?
Models like the Suzuki Alto, Toyota Vitz (locally assembled) and Nissan Note are between the few new options priced under KSh 1.2M.