Kenya's new car sales drop by 16% in 2020 on coronavirus crisis

NAIROBI (Reuters) - The number of new cars sold in Kenya fell by 16% last year as the East African economy reeled from the impact of the COVID-19 pandemic, data from the industry association showed on Wednesday.

Kenya is a small market for new vehicles since many consumers are confined to second hand imports from Japan by purchasing power limitations, but it has attracted global automakers such as Volkswagen due to its growth potential.

The industry sold 11,086 new units last year, down from 13,199 in the previous year, the Kenya Motor Industry Association (KMIA) said.

Travel restrictions put in place by the government between March and July to contain the spread of the coronavirus hit new car sales hard, but the subsequent easing of the measures and a government cash boost for the industry propped up demand.

The automotive sector got 600 million shillings ($5.45 million) from the government to stimulate demand for locally assembled units, said Wanjohi Kangangi, sales director at Isuzu East Africa.

"This encouraged our resilience to sustain our operations through the difficult season," he said.

President Uhuru Kenyatta's government has been trying to encourage local assembly of vehicles through tax breaks for firms and curbs on used imports, to create much needed jobs for the youth, with limited successes.

($1 = 110.0500 Kenyan shillings)

(Reporting by Duncan Miriri, editing by Louise Heavens)