CMC Motors is retrenching 169 employees as a consequence of its exit from the passenger vehicle market, the company has announced in a letter to the Amalgamated Union of Kenya Metal Workers.
The job cuts, which were scheduled to commence on Tuesday, will affect those employed in administration, finance, IT, legal, senior management, parts, procurement, projects, sales and service.
The move comes as CMC clears the remaining stocks of vehicles under the Ford, Mazda and Suzuki –the last franchises it is holding and which are transitioning to new dealers.
“As a result of the termination of these distributorship contracts coupled with the changes in the market demand, CMC Group is reorganising its business in line with a growth strategy that will see it place great focus on the agricultural sector,” Sakib Eltaff, the managing director of CMC, wrote in the letter dated April 24.
“This means that it will become necessary to declare 169 employees redundant. The employees affected are in both management and unionisable categories.”
The company will pay each employee a salary in lieu of notice based on the number of years and collective bargaining agreement (CBA) and severance pay for each completed year of service based on the number of years and CBA, among other separation terms.
CMC says it will now focus on the agriculture sector through sale of tractors, adding that it is also exploring the possibility of venturing into the motorcycle business by establishing a local assembly plant.
“The shift in strategy means that CMC will move away from the mass market passenger vehicle segment. The company will no longer represent Ford, Suzuki and Mazda in Kenya,” the dealer said in a separate statement.
“Ford will be moving to Salvador Caetano in the third quarter of 2023 and Suzuki will be supported by CFAO [Toyota dealer] from the second quarter of 2023. Mazda will announce the new distributor in the coming months.”
CMC’s exit from the passenger vehicle business has given rivals an opportunity to pick up the franchises and grow their market share in the highly competitive industry.
The takeover of Ford will add to Caetano’s existing dealership in Renault, Hyundai and Kia cars in the Kenyan market. CFAO, which was the second dealer of Suzuki, will now sell the Japanese brand on an exclusive basis. The Mazda brand is still up for grabs.
Ford was the most important franchise for CMC, having accounted for 78.7 percent of its total vehicle sales last year according to industry data.
The company sold 388 units of Ford pick-ups and sports utility vehicles in the year ended December 2022, representing a 13.1 percent growth from 343 units a year earlier.
Data from the Kenya Motor Industry Association (KMIA) however shows that the company’s sales of the American vehicles have more than halved from highs of 927 units in 2015.