CMC loses Land Rover franchise to rival company
Posted Thursday, December 6 2012 at 22:02
- Jaguar Land Rover has signed a franchise deal with RMA Group, a new motor dealer that established operations in Kenya four months ago.
- JLR is the owner of the flagship Land Rover Defender, Jaguar and Range Rover brands that CMC has exclusively sold in the Kenyan market.
- CMC said it was surprised by JLR’s decision and accused the franchise owners of malice.
CMC Motors Thursday suffered a major dealership blow after Jaguar Land Rover announced that it had withdrawn its franchise from the troubled car dealer and awarded it to a rival.
South Africa-based Jaguar Land Rover said in a press statement that it had signed a franchise deal with RMA Group, a new motor dealer that established operations in Kenya four months ago, ending nearly 50 years of business relationship with CMC.
JLR is the owner of the flagship Land Rover Defender, Jaguar and Range Rover brands that CMC has exclusively sold in the Kenyan market since independence and which account for 30 per cent of its annual unit sales.
Withdrawal of the flagship brands is particularly unsettling for CMC shareholders as it represents material erosion of their investment without an exit option.
CMC Holdings, which is listed at the Nairobi Securities Exchange (NSE) has been out of the trading floor since September last year.
Capital markets regulator CMA stopped trading in the motor-dealer’s shares in the wake of a vicious shareholder war that has to date ended the boardroom careers of some of longest serving corporate Kenya operatives.
For CMC, loss of JLR brands amounts to more than mere loss of sales revenue. It also means severe erosion of the immense influence that the motor dealer has held among top state officials being the sole supplier of the Land Rover – the de facto official government car – and the richest segment of the Kenyan society who drive the Range Rover.
Withdrawal of the JLR franchise amounts to a double hit for one of Kenya’s oldest motor firms coming just weeks after CMC lost the exclusive dealership of MAN trucks with the appointment of a second dealer, RT East Africa, to distribute the commercial vehicles.
RMA will take over dealership of JLR’s brands in Kenya from February 2013 when CMC’s contract with the brand owners ends.
The Business Daily broke the news of RMA taking over JLR’s franchise on September 5 but CMC chief executive Bill Lay strenuously denied the report.
“CMC Motors remains with the franchise until the end of its current contract in February 2013,” said Willem Schoeman, JLR’s regional manager.
He said the RMA Group brings a broad range of expertise and experience in the motor industry particularly with the Jaguar Land Rover brands which it represents in other global markets.
CMC said it was surprised by JLR’s decision and accused the franchise owners of malice. “We believe that this decision is in bad faith and is intended to defeating the on-going investigations into alleged fraud at the company,” said the statement signed by Mr Lay.