| Inflation and higher costs of credit hit personal car sales Registration of personal cars took a 27 per cent nose-dive in 2011 as higher cost of living and credit edged out the middle class from the luxury segment. Commercial banks raised their interest rates in line with a tight monetary stance taken by the Central Bank after inflation rose all year long to a high of 19. The price of a Toyota premio went up to Sh1. "Most customers were not willing to take up financing," said Frank Okemwa, business and development manager at Kenya Car Bazaar. Asset finance cost rose to 24 per cent in December from a 14 per cent in May. 7 per cent in November. During the year car prices went up owing to the depreciation of the shilling against hard currencies and the consequent rise in interest rates—as monetary policy responded to inflation and currency depreciation—discouraged uptake of asset loans which are usually used to finance vehicle purchases. "The sales dropped towards the end of the year because of exchange rate, which was a big contributor and also as a result of interest rates going up. Cost cutting measures by the Government and corporate entities saw the number of high end vehicle sale drop. |
Tuesday, 6 March 2012
Inflation and higher costs of credit hit personal car sales
