NAIROBI, Kenya- As businesses increasingly focus on cutting operational costs, vehicle leasing has become a popular alternative to purchasing.
Organisations are finding leasing to be a more budget-friendly approach, helping them save on both maintenance and insurance expenses.
According to motor industry players, this trend is set to grow even further as the business landscape evolves.
Jennifer Kinyoe, Managing Director of Loxea—the leasing arm of CFAO Group—foresees substantial growth in the leasing market by the end of 2024.
“The leasing market is expected to expand significantly in the fourth quarter of 2024, driven by the need for businesses to manage their fleets more efficiently,” Kinyoe said.
This surge in leasing interest is largely due to the rising cost of acquiring new vehicles, making leasing a more attractive option for businesses and government agencies alike.
Leasing through private providers often includes comprehensive service packages that cover repairs and maintenance, helping organizations avoid unpredictable expenses and downtime.
Loxea is positioning itself as a leader in Kenya’s evolving vehicle leasing market. As Kinyoe puts it, “We are at the forefront of this change, providing businesses with flexible and affordable vehicle solutions.”
The Kenyan government has also jumped on the leasing bandwagon, with state agencies like the National Police Service and Kenya Power opting for this model to reduce capital expenditure.
Last year, the National Treasury allocated KSh3 billion to clear pending payments to leasing companies. This move underscores the government’s commitment to reducing operational costs while ensuring essential services run smoothly.
With a deal in place between the government and local financial institutions to provide leasing funding, the public sector is paving the way for broader adoption of this trend.
Leasing not only frees up capital but also offers predictable costs and minimizes vehicle downtime, crucial for agencies like the police that rely on a functional fleet.
While leasing is on the rise, Kenya’s new vehicle sales have been experiencing a slowdown. The Kenya Motor Industry Association (KMIA) reported a drop in sales from 901 units in June to 859 units in July 2024. Over the first seven months of the year, 5,993 vehicles were sold, with sectors like agriculture, construction, and transport driving demand.
With businesses and government agencies turning to leasing as a more affordable and flexible alternative, it’s clear that the vehicle leasing market is set to gain even more traction in the coming months.
