Two leading Kenyan banks have put a total of 127 cars on auction. In notices on Wednesday, November 15, Co-operative Bank and NCBA bank announced sale of different vehicles, even as Kenyans confront high cost of living.
Notably, the lenders have repossessed some of the vehicles on auction due to owners defaulting on payments, stemming from a struggling economy.
Another source of these vehicles is usually from private sellers who want to capitalize on getting multiple buyers in the room at the same time bidding on their vehicles instead of waiting for buyers to visit car showrooms.
According to the notices, the vehicles include top of the range luxury cars such as the Mercedes Benz, the Ford Raptor, and the Toyota Prado all the way to smaller cars such as the Toyota Vitz and the Nissan Note.
At the same time, the vehicles that dominated the auction list were smaller and medium sized trucks, which are normally used by Kenyans for business purposes. The trucks are popular in the transport and construction sectors.
Other vehicles put on auction included excavator trucks, which were put on sale by NCBA bank and were notably the most expensive on the list going for Ksh 19 million.
Details of the auction bids
Cooperative bank noted that bidders would require an offer letter after a payment of Kshs3,000 which would also serve as a bidding fee.
However, according to the bank, successful bidders are required by the bank to pay the bid amount in lumpsum within 24 hours after the receipt letter of offer on a first come first serve basis.
Further, the bank specified on the date which they expected the bids on the vehicles.
“Bids to reach us by 29th of November 2023,” the motor vehicle sales notice stated.
On the other hand, NCBA bank invited offers for the purchase of their listed vehicles noting that the vehicles would be received by the bidders on an ‘As is Where is’ basis.
Further, the bank clarified that they would not receive bids later than the 21st of November 2023.
Also Read: Gachagua Office Auctions Cars and Building Materials
Why are so Many Cars on Auction?
In recent times, the Kenyan economic landscape has been unusually shaky. Experts attribute this to the depreciating shilling, the rising inflation rates and the post Covid-19 effects on the economy.
Focusing on the depreciating shilling, the Kenyan shilling has been on a free fall in terms of value for the whole of 2023.
According to a spot check done by The Kenya Times, currently, the US dollar sells at Kshs 156.35 and buys at Kshs151.35 at Equity Bank.
Further, at National Bank, the US dollar buys at Kshs148.70 and sells at Kshs156.95. In this case, this has made importing cars into Kenya more expensive than before.
Therefore, more buyers are rushing to auction centers to purchase these cars, which are sometimes previously owned and therefore cheaper.
Further, more banks are placing more cars on auction to satisfy this growing demand.
Banks See More Loan Defaulters
Additionally, there have been more borrowers defaulting on loans as they grapple with the high cost of credit in the country.
Also Read: Kenyan Banks Ration Dollars Amid Shortage and Rising Demand
For instance, the base lending rates by banks have been on a hike. The base lending rate is a minimum interest rate at which financial institutions base the rates they use for lending loans to borrowers.
Notably, according to the Central Bank of Kenya, the bank lending rate shot to 13.83 percent in August from 13.50 percent in July of 2023.
Consequently, banks have therefore been repossessing more assets such as vehicles as borrowers continue to find it harder to pay back their loans.
