Sharp Increase in Motor Vehicle Prices as Kwacha Depreciation Hits Zambia
The depreciation of the Kwacha, Zambia’s official currency, continues to impact various sectors of the economy, with the vehicle industry experiencing a substantial increase in motor vehicle prices due to the unstable exchange rates.
The steady decline of the Kwacha against the United States dollar has led to high inflation, making the cost of living in Zambia significantly more expensive.
According to the monthly inflation report released by the Zambia Statistics Agency (ZAMSTATS), the prices of Toyota Hilux motor vehicles have surged by approximately 45 percent year-on-year from November 2022 to November 2023.
The cost rose sharply from about K900,000 to around 1 million 3 hundred kwacha annually. On a monthly basis, there was a 9 percent increase, with prices moving from about 1.2 million in October 2023 to about 1.3 million in November 2023.
Similarly, Toyota Corollas have experienced an annual increase of 48 percent, rising from 742,000 to 1.1 million between November 2022 and November 2023. On a monthly basis, there was a 12 percent increase, with prices moving from 972,000 to 974,000 in November.
Kelvin Kameta, spokesperson for car dealers, explained in an exclusive interview with the Zambian Business Times (ZBT) that the increase in prices is primarily due to the appreciation of the dollar against the Kwacha, impacting business sales.
Kameta noted that the rising cost of doing business, coupled with the fluctuating exchange rate, is forcing them to increase motor vehicle prices.
He emphasized that the dollar’s instability has been ongoing, adversely affecting the vehicle industry.
Highlighting the challenges faced, Kameta mentioned the tough business conditions in the last quarter of 2023 compared to the previous three quarters.
He urged the Zambian government to work towards stabilizing the exchange rate, allowing for better planning and fostering a conducive business environment in the industry.
Kameta emphasized the difficulty in planning under the current circumstances, with customers waiting for the dollar to decrease before making vehicle purchases. The call to stabilize the exchange rate echoes the industry’s plea for support to navigate these challenging economic conditions.
Source: ZBT
