New vehicle sales in Kenya have recorded strong growth this year, with the industry registering a 25.2 per cent rise in the first eight months of 2025, largely supported by easier access to credit and asset financing options from banks.
Data from the Kenya Motor Industry Association (KMIA) shows that 8,914 zero-mileage vehicles were sold by the 11 main dealers between January and August, up from 7,120 units sold in the same period of 2024.
The surge was driven by increased demand in construction, agriculture, manufacturing, public transport and other commercial sectors.
Isuzu East Africa, formerly General Motors, remained the leading player, commanding nearly half of the market with 4,275 units sold, representing 47.9 per cent of the total. CFAO followed with 2,862 units, taking up 32.1 per cent. Together, the two firms accounted for about 80 per cent of all new vehicle sales.
Trucks, pickups, buses and prime movers made up the bulk of purchases, with the private sector driving demand even as government institutions continued to lease units. “Call it stable interest rates, agriculture, growing because of increased productivity and affordable fertiliser. Construction projects creating demand for sand and building materials,” said Isuzu East Africa managing director Rita Kavashe.
Government programmes have also contributed to the momentum. In the 2025–26 financial year, the Treasury set aside Sh10 billion for leasing police motor vehicles and Sh3.6 billion for the police modernisation programme.
The public service vehicle industry, especially operators of minibuses and large inter-city buses, has been renewing ageing fleets under new leasing plans.
The market has further been supported by the Central Bank’s continued lowering of the base lending rate. Since June 2024, the Monetary Policy Committee has trimmed the rate from 13 per cent to 9.5 per cent as of last month, helping bring down borrowing costs.
Commercial banks have passed on these benefits, particularly to clients with good credit records, boosting demand for new vehicles.
According to CBK, lending to the private sector improved steadily, standing at 3.3 per cent in July compared to 2.2 per cent in June and a negative 2.9 per cent at the start of the year.
“Growth in credit to key sectors of the economy, particularly manufacturing, trade, building and construction and consumer durables, improved in June and July. This mainly reflects improved demand in line with the declining lending interest rates,” CBK governor Kamau Thugge noted in a post-MPC meeting statement.
Average commercial lending rates dropped to 15.2 per cent in July from 15.3 per cent in June and 17.2 per cent in November 2024.
Despite banks still grappling with recoveries from loan defaults tied to economic challenges, they continue to provide financing for institutions and companies buying new vehicles, while also extending credit facilities for households opting for cheaper second-hand imports.