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Nissan seeks Kenya auto dealer buyout

The Nissan Qashqai model on display at the Total Kenya Motor show on September 8, 2013. Renault-Nissan Alliance is seeking a new distributor of the Nissan and Renault brands in Kenya. Photo/FILE
The Nissan Qashqai model on display at the Total Kenya Motor show on September 8, 2013. Renault-Nissan Alliance is seeking a new distributor of the Nissan and Renault brands in Kenya. Photo/FILE 

Renault-Nissan Alliance (RNA) is seeking to acquire one of Kenya’s major auto dealers, which will serve as the new distributor of the Nissan and Renault brands in Kenya.
The Business Daily established that Simba Corporation and RMA Kenya are among dealers that have opened talks with the global vehicle manufacturer with a view to closing a franchise and majority equity deal.

This will see RNA replace DT Dobie, which has been selling the Nissan and Renault brands in Kenya for years.

RNA severed ties with DT Dobie’s parent CFAO Group after it was bought out by competitor Toyota Group in December 2012.

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“RNA wants to acquire at least 51 per cent equity in whichever dealer it will settle on,” said an executive familiar with the ongoing negotiations.

“RNA has ambitious plans for the Nissan brand and wants to have strategic control in the new dealer that will sell the brand,” the executive who cannot be named without compromising his position said.

It remains to be seen whether the vehicle manufacturer will be able to push for the buyout it is seeking in exchange for dealership rights.

Most local dealers are independently owned, with Toyota Kenya, CICA Motors, DT Dobie and Foton East Africa being the few dealers owned directly or indirectly by global vehicle manufacturers.

The buyout proposal by RNA could see another dealership acquisition in the local market by a foreign multinational. CMC Holdings is being 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.

“We are targeting one of the brands and we are in serious talks with the franchise owners,” said Adil Popat, the CEO of Simba Corporation, which sells BMW cars and Mitsubishi trucks.

It is expected that the winner of the Nissan and Renault dealership rights will raise its market share in Kenya’s new vehicle market substantially, riding on a strong demand for Nissan 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 has signalled intention to acquire new franchises to bolster its vehicle portfolio.

The dealer’s parent firm CFAO said in a statement that one of its objectives this year is the “replacement of Nissan Renault brands in East Africa.”

CMC Holdings last year lost its Jaguar Land Rover (JLR) franchise to RMA Kenya, a subsidiary of Thailand-based RMA Group which used the takeover to enter the local market.

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 in 2012.

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