Motor dealer DT Dobie has ceded its distributorship franchise for Nissan and Renault vehicles to South Africa’s Imperial Group, ending a long-standing association with the brands.
The South African conglomerate is said to be scouting for a local partner to sell the vehicles, whose exclusive dealership DT Dobie has held locally for decades.
Imperial Group is listed on the Johannesburg Stock Exchange (JSE).
The Renault-Nissan Alliance (RNA)—the franchise owners— severed ties with DT Dobie’s parent CFAO Group after it was bought out by competitor Toyota Group in December 2012.
An official of Imperial’s automotive distribution unit Associated Motor Holdings (AMH) told the Business Daily that the South African firm will now represent Nissan and Renault in Kenya and other African markets.
“Imperial has been appointed as the distributor of the two brands in Kenya,” said Robben Giopil, a personal assistant of AMH’s CEO Manuel Pereira. DT Dobie is expected to sell its current Nissan and Renault stocks until year-end.
People familiar with the deal said Imperial has opened talks with several dealers in the Kenyan market with a view to forming a partnership to sell the Renault and Nissan brands.
Imperial has no dealership network in the country and will need to start operations from scratch or team up with existing players such as RMA Kenya and Simba Corporation that are said to be in talks with the South African firm.
“Imperial wants to use an existing dealer to enter the Kenyan market,” said a source familiar with the ongoing negotiations.
“A number of options are being explored including Imperial taking a controlling stake in a local dealer,” said one source.
Imperial is said to be keen on splitting the two franchises to appoint a dealer for each of the brands.
The buyout proposal by Imperial could see the acquisition of a local dealer by a foreign multinational.
CMC Holdings was recently acquired wholly by Dubai-based Al-Futtaim Group in a Sh7.5 billion transaction.
DT Dobie and CICA Motors were in December 2012 acquired by Toyota as part of a Sh274.4 billion Pan-African deal involving their parent firm CFAO.
It is this deal that spooked RNA, prompting it to terminate its distributorship agreements with DT Dobie and start a search for new partners.
It is expected that the winner of the Nissan and Renault dealership rights will raise its market share in Kenya’s new vehicles market substantially, riding on a strong demand for Nissan pick-ups and cars. The two brands account for eight per cent of annual unit sales in Kenya’s new vehicle market.
Nissan is one of the biggest brands in the local pick-up segment, competing against Toyota and Isuzu that is sold by General Motors East Africa.
DT Dobie last year sold 1,140 units of Nissan and 27 units of Renault saloon cars, helping to earn it 12.3 per cent market share.
Loss of the two brands will leave DT Dobie with Mercedes and Jeep brands but the firm’s parent CFAO said it will acquire new franchises to bolster its vehicle portfolio.
The entry of Imperial —directly or through a local partner— is expected to raise competition in a market where cash-rich multinationals are edging out homegrown dealers.
Imperial sells 120,000 new vehicles in Africa and the UK annually and deals in almost all vehicle brands in South Africa including Mercedes, Bentley, BMW, Toyota and Mitsubishi.
The firm, whose automotive revenues stood at Sh250 billion in the six months to December, says it has been selling competing brands by setting up independent units. Imperial’s other business lines include retail, car rental, insurance, and logistics that include warehouses in Kenya.