New vehicle sales in Kenya climbed nearly a fifth in the first half of the year as businesses ramped up investment in trucks, pick-ups and other commercial vehicles, helped by cheaper credit, a stable shilling and increased activity in the construction sector.
Data from the Kenya Motor Industry Association (KMI) shows dealers sold 7,466 new vehicles between January and June, up 19.4 percent from 6,254 units in the corresponding period last year.
The increase extended the market's recovery after sales rebounded by 25.5 percent in 2025, signalling renewed confidence among businesses after high borrowing costs and exchange-rate volatility between 2022 and 2024 forced many firms to postpone fleet replacement and expansion plans.
A more supportive macroeconomic environment encouraged firms to invest in showroom vehicles.
The shilling remained stable against the US dollar, averaging Sh129.29 in the first half, largely unchanged from Sh129.34 a year earlier, reducing exchange rate risks for importers and fleet buyers.
Financing conditions also improved as commercial banks' average lending rate fell to 14.5 percent in May from 15.4 percent a year earlier and below the peak of more than 17 percent in late 2024.
The decline followed successive reductions in the Central Bank Rate, which now stands at 8.75 percent from a recent peak of 13 percent in 2024, lowering the cost of asset financing for businesses.
Industry players said demand was further boosted by increased activity in construction, including the Affordable Housing Programme, road maintenance works and preparations for the planned extension of the Standard Gauge Railway to Malaba, all of which increased demand for trucks, pickups and other commercial vehicles.
“This growth was driven by a resilient economic environment characterised by stable exchange rates, easing interest rates (CBR dropped to 8.75 percent), and lower fuel prices,” Isuzu East Africa, the leading new vehicle dealer and a member of KMI, commented on the half year sales performance.
"Sales were further bolstered by increased economic activity in construction (Affordable Housing, SGR extension to Malaba), road maintenance, and favourable weather conditions for agriculture.”
The construction sector particularly benefited from the resumption of road projects that had stalled after contractors accumulated an estimated Sh650 billion in pending bills. About 585 projects had been suspended in 2024 because of the payment delays.
The government began unlocking the projects from 2025 through a return-to-work programme that included payment of Sh123 billion as part settlement of verified claims accumulated between 2005 and December 2024.
The settlement restored cash flows to contractors, revived demand for bank financing and encouraged purchases of construction equipment and commercial vehicles needed to execute the projects.
Fuel costs also supported purchasing decisions during much of the review period.
Although prices spiked sharply from April after the US-Israel conflict with Iran disrupted global oil markets, businesses had already benefited from relatively lower pump prices during the first quarter before the geopolitical shock filtered through to local fuel costs.
Diesel, the main fuel for commercial transport and heavy machinery, averaged Sh192.65 per litre in the first half, compared with Sh185.83 in the same period of 2024.
Isuzu East Africa remained the dominant player, increasing sales by 24.1 percent in the first half of 2026 to 3,688 units from 2,971 a year earlier. The company accounted for 49.4 percent of all new vehicles sold, up from 47.5 percent last year.
The company sells a range of pickups, trucks, buses and sport utility vehicles, making it a major beneficiary of stronger demand from transporters, contractors, government agencies and businesses renewing commercial fleets.
CFAO Mobility Kenya, the dealer for Toyota, Mercedes-Benz, Volkswagen and Hino, sold 2,381 vehicles, up 18 percent from 2,017 units, retaining its position as the country's second-largest dealer.
Simba Corporation, franchise holder for Mitsubishi, Proton, Ashok Leyland and Mahindra, increased sales to 614 vehicles from 547, while Tata Africa Holdings posted the fastest growth among the leading dealers.
Tata's sales jumped 78.5 percent to 391 units from 219, lifting its market share to 5.2 percent from 3.5 percent a year earlier.
Together, Isuzu and CFAO controlled more than 81 percent of Kenya's formal new vehicle market.
The stronger sales came despite Kenya maintaining one of the region's highest tax burdens on imported vehicles. In July 2023, the Kenya Revenue Authority raised import duty on fully built vehicles to 35 percent from 25 percent after securing approval from East African Community ministers.
The higher rate is above the 10 percent Common External Tariff applied across the seven-member East African Community, increasing the cost of importing new vehicles into Kenya.
Imported vehicles also attract excise duty of between 25 percent and 35 percent, depending on engine capacity, in addition to the standard 16 percent Value Added Tax.
Excise duty is calculated on the combined value of a vehicle's landed cost and import duty, while VAT is charged on the cumulative value after import duty and excise tax, raising the final retail price.
Vehicle sales are widely viewed as a leading indicator of private sector investment because commercial vehicles are predominantly purchased by firms in construction, logistics, manufacturing and agriculture.
