DT Dobie risks losing franchises after Toyota deal
New cars on display at the DT Dobie Showroom along Koinange Street, Nairobi. Photo/DIANA NGILA
What you need to know:
French firm CFAO says Nissan, Mercedes, Jeep could appoint new dealers or sell directly.
This is based on the recent acquisition of CFAO by Toyota Tsusho Corporation whose parent firm competes against some of the franchise owners.
Nissan pick-ups are the fastest selling vehicles in the DT Dobie/CICA Motors stable, recording 1,111 unit sales last year.
Auto dealers DT Dobie and CICA Motors risk losing some of their prized franchises following the acquisition of their parent company by a subsidiary of Toyota Group
French firm CFAO, which owns the two dealers, says the manufacturers of Nissan, Mercedes, Jeep, Great Wall, Renault, and Hyundai vehicles could appoint new dealers or launch direct sales in the local market, citing a possible conflict of interest.
This is based on the recent acquisition of CFAO by Toyota Tsusho Corporation whose parent firm competes against some of the franchise owners.
“A new shareholder of the company which could be considered by certain business partners as a competitor may cause the renewal of some contracts, some of which terminate in the near future, to be more difficult,” CFAO said in a notice to investors.
The French firm said some franchise owners may start selling their vehicle directly or decide to appoint new dealers, which will benefit rival dealers from the high value brands.
A potential migration of the franchise owners to new dealers could cause fresh realignment in the country’s new vehicle market that has witnessed several dealership coups.
Nissan pick-ups are the fastest selling vehicles in the DT Dobie/CICA Motors stable, recording 1,111 unit sales last year. Mercedes Benz cars and trucks come second with 483 units sold last year, with all other brands selling less than 60 units in the same period.
The two auto dealers are the latest to face tests from franchise owners as CMC Holdings fights a legal battle to keep the key Jaguar Land Rover franchise whose owners intend to give 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 that are renewed upon their expiry subject to successful renegotiation.
Nissan said DT Dobie currently remains its distributor in Kenya but declined to comment further.
“I can confirm that CFAO remains Nissan’s distributor in Kenya, however as a matter of company policy I cannot comment further on what is a confidential agreement,” David Swerdlow, a senior press officer at Nissan, said in a statement.
Stuttgart-based Daimler AG, which owns the Mercedes franchise, said it could not comment by the time of going to press.
Analysts say competing vehicle manufacturers are usually uncomfortable sharing the same distributor because their rivals may access competitive information that may lead to price undercutting.
The distributor may also choose to focus on marketing fast-moving vehicle brands at the expense of less popular ones.
