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Shipping & Logistics

Coast car dealers clash with brokers over commissions

Imported cars
Imported cars in Mombasa. The sellers now complain of “unwelcome” brokers at their yards. FILE PHOTO | NMG 

Importers and dealers of secondhand vehicles are now crying foul over the influx of brokers near car bazaars.

The dealers claim the brokers strategically hover near the car yards, waylaying potential buyers in order to claim agency commissions or fees whenever the client buys a vehicle.

This has added another challenge to the sector which is currently struggling with several county and national government policies that are adverse to their business.

They however admit that there are genuine brokers in the business who bring clients to the dealers and claim an agency fee.

Speaking in separate interviews, Car Importers Association of Kenya (CIAK) national chairman Peter Otieno and Kenya Auto Bazaar Association (KABA) chairman Major (Rtd) John Kipchumba said the trend is worrying most car dealers at the moment.

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The problem are the brokers who lie idling near the showrooms and if they notice a client entering the premises, rush and pretend to have brought in the client.

“If a sale agreement is made, this man will start to claim an agency fee from the dealer and in some cases, they even become violent should the car dealer refuse to give them money,” said Mr Otieno.

Mr Otieno said the agency claim differ depending on the type of the vehicle the showroom owner will sell to the client.

“They have their own set up payments ceilings starting from Sh20,000 for a small car. If it is a vehicle going for about Sh3 million, these agents will ask for a Sh300,000 to be given to them.

“In a situation that they have really brought the client, we have no objection. Our worry is that idlers have taken that cue and are bringing in a lot of confusion into the trade,” said Mr Otieno.

Major Kipchumba said the situation is a grey area which now needs an attention because it is complicating the car trade business, which is already going through multiple challenges at the moment.

“In the motor trade industry, if I have client and take them to a dealer, the seller is supposed to pay an agency fee for taking the client there. If that is done genuinely, there is no problem,” said Major Kipchumba.

He however said that there have been some instances where some agents have not been paid their agency fees leading to some confrontations in the showrooms.

“The big problem is that most of these agreements between the car dealers and the brokers are most of the time verbal and do not have any written document.

“Brokers would negotiate for a car that cost about Sh500,000 to be sold for Sh550,000.

“So in that case if that car is sold, the agent is supposed to get the above amount as his commission. But some car dealers also shortchange these brokers and it is a serious issue,” said Major Kipchumba.

Major Kipchumba noted that there exists in that trade a lot of grey areas that are now raising a concern to the industry.

“We have this problem because you just get two people into the showroom and one claims to be the agent who has brought the client. Once the deal if finalised that is where the problem starts.

“At the end of the day, you give out money for a person who just saw a client entering the show rooms,” said Major Kipchumba.

Currently the dealers have been engaging the government over the new policy that will see the age limit of imported second-hand vehicles reduced from the initial eight to five years.

"That aside, the Mombasa county government, for example, also wants to remove the dealers out of the town to Miritini. This is definitely going to be a setback,” said Mr Otieno.

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