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Hyundai Kenya battles to keep car dealership

The logo of Hyundai Motors at a dealership in Seoul
The logo of Hyundai Motors at a dealership in Seoul. FILE PHOTO | NMG 

The Karmali family, which has been selling Hyundai vehicles in Kenya for decades, has gone to court and obtained temporary orders stopping Portuguese multinational Salvador Caetano from taking over the franchise.

South Korean automaker terminated the contract of Hyundai Motors Kenya Limited, associated with the Karmalis, and handed it to Salvador Caetano Auto Africa.

The Portuguese multinational subsequently moved to merge the newly acquired Hyundai dealership with its local Renault franchise, which it established in partnership with Simba Corporation. Simba, which already sells Mitsubishi trucks separately, rejected the business proposal and Salvador Caetano reacted by terminating its Renault dealership.

The events have sparked a three-way fight pitting the Portuguese firm and the two Kenyan firms that want to retain their respective franchises.

Hyundai Motors went to court which preserved its business until further orders are issued.

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“That the status quo be maintained,” Nairobi’s High Court ordered on a September 27 ruling in which the defendants were the South Korean automaker and the Portuguese firm.

The court also asked the parties to take the dispute to arbitration within 15 days.

The matter is set for hearing in the court on October 22.

Simba, which lost its initial bid to block the termination of its Renault franchise, says it has also appealed the court’s decision.

The fallout indicates that Salvador Caetano could be planning to start selling Renault cars and Hyundai trucks on its own.

Sales of new Hyundai commercial vehicles stood at 94 in 2018, giving the brand a 2.7 percent market share in the 3.5 to 9-tonne trucks category.

In the first court case filed by Simba, the judge ruled that the Portuguese multinational has a right to terminate the Renault franchise agreement.

“This is a country and jurisdiction where contracts are honoured and upheld. Parties have the freedom to enter into and to opt out of contracts as they wish,” Justice Maureen Odero said in the judgment order.

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