Old car brands gear up for emerging luxury market

The Peugeot 504 model (above) used to be a household name in Kenya. A motor dealer, Urysia, now plans to bring  in newer Peugeot models like the 307 and 407.
The Peugeot 504 model (above) used to be a household name in Kenya. A motor dealer, Urysia, now plans to bring in newer Peugeot models like the 307 and 407. 

Old motor vehicle brands that left the Kenyan market several years ago are making a comeback to cash in on new demand emerging with the ongoing economic recovery.

French saloon car, Peugeot, will re-appear in showrooms in February after it pulled out of the local market in 2008 while India’s Ashok Leyland will seek to reclaim the market share it enjoyed in the 1980s after Marshalls East Africa snapped its dealership licence.

Marshalls East Africa has also won the dealership for the luxury Audi brand—which was also a household name in the 1980s and early 1990s, but vanished from the Kenyan market following the opening of the motor vehicle market to the cheap second hand vehicles in the mid 1990s.

The mainly European brands had also been edged out of the market by cheaper Asian makes such as KIA, Toyota and Maruti.

Executives in the motor industry link the return of the mostly European brands to Kenya’s emerging middle class who are developing an appetite for luxury goods and services.

“For the investors, the old brands are an easier way of driving sales,” said Renaldo D’Souza, an analyst at Genghis Capital.

“Because they have an existing client base, the old brands require less marketing spend that would be necessary to push fresh brands, especially in the saloon luxury market,”

This luxury market is what is emerging in the radar of sellers of Peugeot and Audi brand, which could also fit into the governments’ requirements for executive transport now that it has dropped fuel guzzlers such as Mercedes Benz, BMW and Volvo.

The entry of these two brands look set to intensify the battle for control of the luxury segment of the market that has remained in the hands of models such as Mercedes Benz, BMW and Range Rover.

Jaguar brands are also to be rolled out by CMC Motors this morning, further intensifying the market share wars. Auto dealer Marshalls used to sell Peugeot cars for about five decades before the dealership for the French car was discontinued in 2008. Marshalls has since been selling the old stocks of the brand.

But Urysia, a new player in the new motor vehicle market has won the dealership rights to the Peugeot brand, bringing back the car to Kenyan roads. Urysia’s managing director, Claude Mwende, a former CEO at Marshalls, says the firm is betting on the heritage of the Peugeot brand to rev up sales in the competitive formal vehicle market.

“The Peugeot brand has a good following in the Kenyan market. The manufacturer now has the correct ambition for Africa,” he said.

The dealer is targeting the government and corporate clients who traditionally account for over 80 per cent of new vehicle sales.

The government has moved to leasing —hiring of cars serviced by dealers — and buys cars with no more than 1,800 cc engines for its top officials in a bid to cut transport costs. In previous years, Peugeot was a favourite of government ministries and agencies which bought hundreds of the 504 model.

Mr Mwende said the firm will from early next year import upgraded versions of the Peugeot models already in Kenya. The new brands will include Peugeot 308 and 408 — new versions of the Peugeot 307 and 407 models.

From 2012, Urysia plans to bring in four entirely new Peugeot saloon brands with its eye cast on the luxury market .Marshalls, which lost the Peugeot dealership in 2008, is banking on the Audi and Leyland brands to pull it from losses.

The Leyland dealership will serve the heavy commercial market that is growing rapidly on the back of a recovering economy that is fuelling construction and cross-border trade. The firm will also be targeting security contracts borrowing from the India’s experience where Leyland is the biggest distributor of trucks to the country’s military. “It’s (Leyland) is destined to give the company a competitive edge in one of the most robustly growing segment in the commercial services,” Marshalls chairman, Fred Amayo , told shareholders last week.

The old brands are coming back at a time when the new auto dealers are reporting reduced sales brought home by the financial crisis and the aftershocks of the 2008 post-election violence.

In the 11 months to November, total sales of new vehicles stood at 9,541, indicating the sector is set to close at about the all-time low of 10,264 units seen last year. Industry players say the economic upturn that has lifted most sectors, including tourism, financial services, and real estate, is yet to translate into orders for new cars.