Vehicle dealers in Kenya are now venturing into unconventional segments to keep afloat as the sector register less sales on shrinking disposable income.
Vehicle assembler Isuzu East Africa has for instance partnered with the Co-operative Bank Plc to deliver 45 Isuzu NQR 33-seater buses worth Sh238 million to Metro Trans PSV Sacco.
The buses, which sell for Sh5.3 million each, are the largest fleet delivery the auto has managed to put together for the PSV sector in one deal.
Speaking while handing over the fleet, Rita Kavashe, Managing Director, Isuzu East Africa said the initiative was prompted by the need to support the economic recovery measures.
She said that the lease agreement is expected to support growth and the return to business for Public Service Vehicles operators who had been severely affected by the recent Covid-19 lockdown and travel restrictions.
‘’To mitigate this, we have through one of our dealers; Central Farmers Garage (CFG) already manufactured 25 vehicles under this leasing deal from Co-op Bank. Today we are delivering 45 more buses as part of the target 100 buses valued at Sh530million,” she said.
The lease agreement’s main advantage is that PSV operators do not need to pay a deposit to get a vehicle into their fleets.
This makes access to new vehicles easier for operators emerging from the economic impact of Covid-19. The deal to the PSV Saccos offers an affordable and flexible hire to use, as and when needed vehicle ownership model.
According to Kaveshe, the transaction was a good demonstration of local companies coming together to support locally manufactured products.
On his part, Robert Mbugua, chief executive officer, Co-op Bank Fleet Africa Leasing Ltd said that the lease arrangement was an innovative way for the bank to better support PSV customers acquires the assets they need to grow their business.
“This is a cost-effective way for PSV Saccos to gain access to new vehicles, and then pay monthly or quarterly installments against the cost of the vehicle as it continues to generate revenues for them,” Mbugua said.