Influence of Interest Rate Capping on Performance of New Motor Vehicle Firm, Isuzu East Africa Limited

Abstract

The primary aim and objective of this study was to investigate and determine the influence of interest capping rate on the performance of new motor vehicle firms focusing on Isuzu East Africa Ltd. The study adopted case study design and data collection included both secondary and primary data methods. The researcher used face to face interview in collecting the primary data. The target population of the study included the top management of Isuzu East Africa such as the Managing Director, the Financial Director, the Sales Director, Production Director and the Distribution Manager. The interview questions were closely related to the objective and aim of the study and the data analysis in the study was done through the use of content analysis. This was done with the aim of obtaining systematic qualitative indepth description of the study variables. The study concluded that interest rate capping negatively influence the performance of Isuzu East Africa Limited. This is because since the introduction of the new interest capping rates, the firm has experience high decline in sales volume as well as decline in revenue generation. The study recommends the need for Isuzu East Africa to consider and appeal the interest rate capping by suggesting relevant policies and programs to various stakeholders. The study also recommends that Isuzu East Africa top management should use other financing options including internal financing to attract their customers rather than dependence on financial institutions for financing their customers. The study also recommends that further research should also be undertaken to investigate, analyze and provide the effect of interest rate capping policies or rules on borrowing operations and other inflation and foreign exchange activities or rates within the East African region.