Philippe Delunsch, the DT Dobie sales and marketing director, when the motor dealer unveiled new Jeep models in Kenya last week. Photo/Correspondent
What you need to know:
Toyota Tsusho Corporation in December paid Sh265.4 billion to acquire 97.81 per cent stake in French firm CFAO, which fully owns Kenya’s DT Dobie.
The deal has spooked global vehicle manufacturers who are concerned that Toyota will give priority to the sale and marketing of its vehicles at the expense of competing brands.
This is what has led to the loss of the Renault franchise.
DT Dobie has lost the Renault franchise and is fighting to keep its other brands as international franchise owners seek to cut links with the dealer following its acquisition by rival Toyota.
Toyota Tsusho Corporation (TTC), which is the trading arm of Toyota Group, in December paid €2.3 billion (Sh265.4 billion) to acquire 97.81 per cent stake in French firm CFAO, which fully owns Kenya’s DT Dobie.
The deal has spooked global vehicle manufacturers who are concerned that Toyota will give priority to the sale and marketing of its vehicles at the expense of competing brands in CFAO subsidiaries in Kenya and elsewhere.
This is what has led to the loss of the Renault franchise and, CFAO, which operates in Africa, has told Paris regulators that it may lose other franchises due to the Toyota deal. Besides Renault, DT Dobie trades in Nissan, Jeep and Mercedes in the Kenyan market.
“Certain agreements — notably distribution agreements for the Nissan brand in Nigeria and for the Renault brand in Nigeria, Ghana and Kenya — have been terminated,” CFAO said in a filing with French financial authorities.
“Due to the change of control, the CFAO Group may find it more difficult to keep, renew or enter into agreements or to develop new business opportunities in the automotive distribution business in the future. Certain termination requests are still subject to negotiations,” said the firm, which is listed on the Paris bourse.
DT Dobie acquired the Renault franchise in late 2011, reviving a brand that had been absent from the market for years after Amazon Motors stopped selling it.
Data from the Kenya Motor Industry Association (KMI) shows that DT Dobie sold 32 Renault cars last year, representing two per cent of its total 1,680 unit sales that earned it 13 per cent share of Kenya’s auto business.
General Motors East Africa had a 27 per cent stake while Toyota controlled 24 per cent of the market.
DT Dobie recorded sales of Sh9.7 billion and a net income of Sh403.1 million in the period that saw it pay a dividend of Sh133.3 million to the parent company, according to CFAO.
DT Dobie was betting on the Renault dealership to enter the budget saloon car market and diversify its earnings away from the mainstay Nissan pick-ups and Mercedes trucks. But the deal made by its parent company has scuttled its growth plans and it remains to be seen whether the local dealer will retain the remaining brands.
In February, Nissan Motor Company and Daimler AG —which owns the Mercedes brand— told the Business Daily that DT Dobie continues to be their local distributor but were noncommittal on whether they would renew their existing contracts.
CFAO noted that some franchise owners may start selling their vehicles directly in the local market or decide to appoint new partners in what will benefit rival dealers.
DT Dobie is the latest to face tests from vehicle manufacturers after CMC Holdings lost the Jaguar Land Rover franchise to Thailand-based RMA Group.
Simba Corporation has benefited the most from dissatisfied vehicle manufacturers, acquiring the BMW franchise from Mashariki Motors in 2008 and the Mahindra dealership from the Ecta Group of companies mid last year.
CFAO, like other vehicle distributors, has fixed term contracts with vehicle manufacturers, which are renewed upon expiry subject to successful renegotiation.
Both CFAO and Toyota Tsusho were aware of the risks posed by their tie-up and the conglomerates now appear ready to invest more in alternative businesses in the continent, such as retail and pharmaceuticals, as the automotive segment comes under pressure.
CFAO last month announced a joint venture with French retail chain to set up hypermarkets in eight African countries including Ghana, Nigeria, and Gabon. In Kenya, the Competition Authority is yet to approve the DT Dobie deal.
