New vehicle sales in Kenya dipped in May to the lowest level recorded this year, as the auto industry faced growing pressure from a sluggish business environment and reduced public sector demand.

According to data from the Kenya Motor Industry Association (KMI), only 988 units were sold by the 11 leading new car dealers last month, down from 1,015 units in April. This continued a downward streak from March’s 1,202 units, which remains the highest monthly sales figure in 2025.

The bulk of the vehicles sold were Completely Knocked Down (CKD) units—cars imported in parts and assembled locally by dealers, some of which are then exported within the region.

January and February recorded 1,008 and 1,088 units respectively. Although May sales fell month-on-month, they were still higher than the 958 units sold during the same month in 2024.

Between January and May, the total number of units sold stood at 5,301—up 27.6 percent from 4,154 units recorded during the same period last year, showing an overall positive growth despite the recent slowdown.

The dip in May came even as loan interest rates dropped, offering easier access to financing for car buyers. The Central Bank of Kenya has been cutting interest rates to boost lending and stimulate economic recovery.

The Central Bank Rate was lowered in June from 10.00 to 9.75 percent following a decision by the Monetary Policy Committee aimed at supporting business activity and stabilising the exchange rate.

“Growth in commercial bank lending to the private sector stood at 2.0 per cent in May 2025 compared to 0.4 per cent in April, and -2.9 percent in January 2025. This reflects improved demand in line with the declining lending interest rates,” said CBK governor Kamau Thugge.

Commercial banks’ average lending rate declined from 15.7 percent in April to 15.4 percent in May, down from 17.2 percent in November 2024. Asset financing by banks remains the main source of credit for businesses purchasing new vehicles.

Still, the market has been constrained by a sharp drop in government vehicle leasing and delayed payments to suppliers, which have affected cash flow in the private sector. Dealers say this has delayed ongoing projects and slowed procurement of vehicles meant for implementation.

Isuzu, which remains the top seller with 48.4 percent market share, noted that government payment delays continue to hinder smooth business operations in the vehicle sector.