Tough Times Open Up Opportunity for Value Products in Kenya’s Trucks Market
Despite the current tough economic climate evidenced by extended consumer fatigue, the trucks and buses market in Kenya remains competitively attractive for growth, particularly in the value-driven segments.
This is according to Deluxe Trucks and Buses East Africa, the distributors for Ashok Leyland Trucks and Buses in East Africa that has seen a 50 percent increase in sales since the beginning of the year.
The industry valued at about USD 2 Billion has grown in recent years driven by infrastructure development, urbanization and the expanding e-commerce sector. Even so, faced by challenges such as economic pressures, new taxes, political protests, volatile currency exchange rates, and increased fuel costs the market has witnessed a substantial 17-18% contraction compared to the same time last year.
According to Hussein Kamal the recently appointed General Manager, this is a reflection of the the broader difficulties being experienced across the economy, including business struggling with affordability, access to capital, and high operational costs.
The company that has since the start of the year sold 92 trucks against the 3,564 units of commercial vehicles sold in the first half of 2024 is however not fazed by this. With eyes set on systematic growth starting with the tipper segment, Deluxe Trucks and Buses has set an ambitious target to secure the number two position in overall sales by the end of 2024.
“This growth indicates the potential within the market for value-oriented products in the light and intermediate commercial vehicles segments. Ours may be modest numbers, compared to the competition but we believe we have great opportunities for growth over the next one year”, said Kamal.
An industry veteran of 20 years, Kamal believes the demand for trucks and buses in Kenya remains robust due to competitive pricing, high quality, and comprehensive after-sales support, all important market drivers where Ashok Leyland excels. Positioned as a challenger brand, Ashok Leyland offers up to 5-years or 500,000-kilometer warranty, making it an attractive alternative in the tough economic environment.
For instance, the Ashok Leyland Phoenix light truck, enables customers to calculate the cost of transporting goods for up to four-years, demonstrating long-term value and return on investment beyond the initial purchase price. With this positioning the company has confidently cast eyes on also acquiring a 20% market share in the fast moving consumer goods segment – which represents over 50% of all truck sales in the Kenyan market – by the end of 2025.
“We expect a period of consolidation in the short term, with growth prospects improving as the broader economic situation stabilizes”, explained the cautiously optimistic Kamal. The company he said measures success using a “cost of operations” metric tailored for different market segments.
In addressing high operating costs that tend to elevate the total cost of ownership – often times the Achilles Heel for commercial vehicles, customers can access up to 95% financing or re-financing, through strategic partnerships with major commercial banks thus addressing issues of affordability .
