“People have money!” Kenyans casually exclaim whenever affluence is spotted. For some, like, Hussein Ibrahim, Inchcape Kenya managing director, this is a daily observation.
Inchcape runs the local dealership for a string of luxury automotive brands, including Jaguar Land Rover and BMW.
Ibrahim’s current headache is a supply hitch of the new 2020 Land Rover Defender 110 due to a global shortage of computer chips.
He told Financial Standard that since the new Defender’s introduction to the country last year at the height of the pandemic its sales have overtaken those of the other luxury cars in the Range Rover family.
“We could have sold more, but we are facing supply challenges. There’s a microchip production problem. We’ve had quite a number of orders that have been back-ordered because of production constraints,” he explained.
Last year’s data from the Kenya Motor Industry (KMI) shows that Inchcape sold 66 units in the luxury vehicles segment.
These included 36 vehicles from the Range Rover stable, 24 BMWs and six Jaguars. The affluent seemed to defy the ill effects of the coronavirus pandemic that has depressed economies and compromised many people’s spending power.
According to KMI data, 11,086 new vehicles were sold in the year, including 238 Volkswagens, 180 Mercedes Benzes, 25 Porsches and two Bentleys.
Isuzu, known for its trucks and pickups, topped in overall vehicle sales, moving 4,340 units followed by Toyota, which sold 2,426 units.
Recently, Jaguar Land Rover (JLR), Britain’s biggest carmaker, temporarily shut two of its main factories owing to the shortage described as “chipageddon.” The pandemic has raised the demand for semiconductor chips used in electronics, such as computers.
New cars contain scores of microprocessors, and the shortage also affected many other firms, including phone companies.
Ibrahim reckons that by January this year, they were supposed to have the diesel Land Rovers Defenders but only started receiving them last month.
At the peak of the Covid 19 pandemic last year, Inchcape introduced a fresh Land Rover line, which includes the elegant Range Rover family and the Discovery SUVs.
The high-spec edition of the 2020 Land Rover Defender sells at about Sh21.6 million, while the base model goes for about Sh14 million.
Ibrahim explained that the appeal and hype made it a top seller. The iconic Defender, which has a 70-year-0ld history and best known for the 90 and 110 series, had stopped production in 2015. The new model is marketed as “the strongest and most capable vehicle ever created.” It’s more modern and exceptional for a hardcore SUV.
“There was a lot of hype globally… people come in and already know everything about it,” said Ibrahim.
“The value proposition is also very good, keeping above the rest of the vehicles in this range which is limited. One guy who had seen it on YouTube by a car blogger came to confirm whether the local one has a certain feature and immediately bought it,” he added.
The vehicle is an offroad juggernaut reputed globally for its ruggedness and versatility and has over the years gained a cult following.
“The new shape defender was very polarising because many of the hardcore followers called it a ‘slay queen,’ which couldn’t venture off-roading,” said Ibrahim.
Inchcape ran a road testing programme of the vehicle for the doubting Thomases, which he said played a key part in its success.
“We sold so many cars because of this… people were converted because of driving. Its specs show it’s three times stronger than the older one in terms of the integrity of the body, suspension, power, better towing capability and comfort,” he said.
But who are these affluent customers for the high-end vehicles?
Ibrahim observed that it’s a cocktail of captains of industry, celebrities and generally high net-worth individuals.
Kenya has a rising class of dollar millionaires drawn from jobs such as technology and financial services.
It is also among Africa’s largest luxury markets. The number of Ultra-high-net-worth individuals (UHNWIs) – wealth exceeding $1 million – stood at 3,323 in 2020, falling 22 per cent owing to pandemic shocks. Billionaires or UHNWIs whose liquid assets exceed $30 million (Sh3.2 billion) stood at 90.
Ibrahim explained that politicians, for example, are not so much into German brand BMW but other brands such as the Land Rover.
These sophisticated and well exposed HNWIs also pick vehicles for their children when shopping for their own “toys.”
“You find someone has bought themselves a Range Rover Vogue and comes and buys for their son or daughter the smaller cars like the BMW X1 or BMWX3,” he said.
Others just want a classy car that enables them to swagger into business meetings and strike deals.
“Some of them are top salespeople who are looking for an image,” explained Ibrahim.
“They just want to be seen in a BMW so that when they go to sell something or clinch a deal, they look ‘serious’,” he said.
Inchcape also leases vehicles in all the luxury brands.
The company recently entered the motorcycle market seeking to tap into a growing community of bikers in the country. It unveiled the high-end BMW Motorrad (motorcycles) at its Sh160 million BMW showroom at the One Africa Place Building in Nairobi’s Westlands. Prices range between Sh900,000 and Sh4 million.