Late 2011 and early 2012 proved to be a tough financial time for most Kenyans. Inflation hit a record high 19.72 per cent, the shilling deteriorated against major currencies and price of basic commodities increased. In spite this, Kenyans love for luxury goods remained.
Kenyans flocked extravagant joints such as KFC and Brew Bristo in large numbers plus sale of new luxury goods such as cars increased in spite double digit inflation rates.
As posted in the Business Daily, data from the Kenya Motor Industry Association shows that the sale of car models like Mercedes and BMW stood at 124 units in the six months to June, rising 17 per cent from 106 units a year ago. Bavaria Auto’s sale of the BMW cars rose to 27 units from 23 while CMC Holdings, which sells Jaguar, Range Rover, Land Rover Discovery and Freelander models, raised its sales to 25 units from 19 units. These are cars which carry a price tag of no less than KES 9.5 million.
Why this so, why are Kenyans buying more and more of luxury goods despite high inflation rates and a weak shilling?
As Dr. Paurav Shukla puts it; consumers consume products to satisfy two major needs, utilitarian needs and hedonistic needs. Utilitarian needs refer to basic needs such as food, thirst and shelter while hedonistic needs largely includes wants such as entertainment and status which mainly focus on pleasure, this is where luxury goods are mainly found.
While it would be expected that consumers would cut down on luxury goods during tough financial times, it appears to have not been the case based on the above lifestyle illustration.
Here’s how I see it: Over the past few years Kenya has experienced unprecedented economic growth spearheaded by well executed economic recovery strategies. In the long run, luxury consumption has caught the eyes of the masses.
Dr. Shukla states that people would be prone to consume more luxury goods despite tough financial times mainly due to mass consumption behavior. Luxury products have become much closes to becoming a necessity for most affluent customers who still represent the middle class in the socio-economic classification terms.
It is thus no wonder the number of Range Rover House, Range Rover Sport and X5’s cruising on our streets are increasing, and alarmingly so.
I guess this love for luxury goods has motivated giant car sellers to launch more luxury cars into the Kenyan market.
As posted in the Business Daily, DT Dobie has announced plans to introduce American luxury car, Dodge, in the Kenyan market. CMC holdings on the other hand recently introduced Range Rover Evoque priced from KES 11 million and has so far sold four units of the model since the year begun.