DT Dobie to lose Nissan franchise after Toyota deal
DT Dobie is set to lose the Nissan franchise as international vehicle manufacturers seek to cut links with the dealer following its acquisition by rival Toyota. FILE
What you need to know:
The looming cancellation of the mainstay Nissan dealership comes after DT Dobie lost the Renault car franchise earlier in the year.
The private auto dealer faces lower earnings from the loss of the two brands that account for two-thirds of its annual unit sales.
DT Dobie is set to lose the Nissan franchise as international vehicle manufacturers 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, last 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 marketed by CFAO subsidiaries.
CFAO said in a regulatory update that the owners of the Nissan brand have decided to terminate their distribution agreement in the short term, affecting its African subsidiaries including DT Dobie that sells the brand.
The private auto dealer faces lower earnings from the loss of the two brands that account for two-thirds of its annual unit sales. “Two CFAO automotive partners including the Renault Nissan Group have officially informed CFAO of their decision not to renew certain distribution contracts, citing TTC’s takeover of CFAO in late 2012,” CFAO said in a statement.
“The dates on which these agreement terminations or non-renewals will take effect will be spread over the period between the end of December 2013 and September 2014 and will depend on the country and the brand.”
DT Dobie’s marketing manager Carol Wamae did not respond to calls from Business Daily by the time of going to press.
Data from the Kenya Motor Industry Association (KMI) shows that Nissan is the fastest-selling brand at DT Dobie, moving 1,111 units or 66.1 per cent of the 1,680 units it sold last year. It was followed by Mercedes at 483 units, Jeep (54 units) and Renault (32 units).
DT Dobie recorded sales of Sh9.7 billion and a net income of Sh403.1 million last year in the period that saw it pay a dividend of Sh133.3 million to the parent company, according to CFAO.
The auto-dealer has relied on the Nissan franchise to grow its presence in the pick-up market where it is one of the biggest players alongside General Motors East Africa and Toyota Kenya.
CFAO did not disclose the identity of the other vehicle manufacturer that has issued it with a termination notice.
Besides Nissan, the French firm’s other partners in Kenya include Daimler A.G. and Chrysler which manufacture Mercedes and Jeep vehicles respectively.
The fallout from the Toyota deal may see some franchise owners launch direct sales in the local market or decide to appoint new partners.
Nissan and Renault have a strategic alliance based on cross ownership and the two multinationals’ brands could be housed under the same distributors to be appointed in the short term—industry sources intimate the two are already seeking alternative dealers in the Kenyan market where manufacturers have become increasingly impatient with the current partners.
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 has, however, signalled its intention to fight for a larger share of the regional new vehicle market, pointing to bruising competition in the coming years.
It intends to do this by stopping further loss of franchises in addition to pursuing new distribution agreements and acquisition of rival dealers.
“CFAO has reasserted its commitment to a multi-brand distribution strategy and its determination to pursue the expansion of CFAO Automotive, notably in Eastern Africa,” the firm said in a statement.
“For that purpose, the group is examining potential new partnerships in these regions, as well as new acquisitions in Africa.”
