A new report released on Monday by corruption watchdog Transparency International and the state-run Kenya National Commission on Human Rights said the government had spent $12.2 million on cars.
The findings follow earlier corruption allegations last week against senior officials.
The report entitled Living Large: Counting the Cost of Official Extravagance in Kenya said: "The shocking finding is that the amount spent on the luxury cars is just about the same amount that was allocated under [a development scheme] for 31 of the country's poorest constituencies.
"It is cruel that in a country where poverty is so rampant, our leaders' appetite for luxurious living continues to be indulged," it said.
About 60% of Kenya's 32 million inhabitants live on less than one dollar a day and up to four million people are now estimated to be in need of food assistance as they suffer from a drought that has ravaged east Africa.
The report said: "Perhaps even more harmful than the monetary loss is the damage that such wasteful expenditure causes by seriously undermining other reforms.
"Perceptions do matter. Conspicuous consumption builds resentment in society and ridicules efforts aimed at securing external financial support.
"Because the line between such expenditure and corruption is also very thin, senior government officials continue to be perceived as corrupt," it added.
"Conspicuous consumption builds resentment in society"
Transparency International report
Between January 2003, when Mwai Kibaki was sworn in as the country's third president, and September 2004, the government bought 57 Mercedes Benz luxury sedans and sport utility vehicles, 17 Mitsubishi Pajeros, 13 Nissan Terranos, nine Nissan Patrols, three Range Rovers, two Ford Discoveries and a Land Rover Freelander, the report said.
Over that period, the top three offending ministries were the High Court, which spent $1.1 million, the ministry of roads and public works, $911,750, and the ministry of water resources management, $662,000, it said.
The report is likely to fuel already heightened anger against the government amid allegations made public last week that the vice president, two sitting ministers and other current and former senior officials were involved in a scheme to defraud the state of more than $200 million.