Kenyan new cars retailer CMC Holdings will lay off 169 workers after ending three lucrative dealerships for global brands of passenger vehicles, citing poor local sales.
The affected workers are spread out across its branches in the country, including Mombasa, Nakuru, Kisumu, Nanyuki, Meru, Eldoret and Kitale.
CMC announced earlier on Monday it will no longer distribute global car brands from Ford Motor Company, the American multinational automobile manufacturer headquartered in Michigan and Japan's Mazda Motor Corp and Suzuki Motor Corp.
Consequently, it will now mainly focus on the agriculture sector by supplying tractors and farming implements.
CMC Motors Group Managing Director Sakib Eltaff linked the end of the distribution deals to a decline in passenger vehicle sales over the years on the back of a difficult local and global operating environment and global supply disruptions.
"As a result of the termination of these distributorship contracts coupled with the changes in market demand... this will result in a reduction in the number of roles and the resources required to execute the remaining functions," said Mr Eltaff.
"This means that it will become necessary to declare 169 employees redundant."
CMC said it working with the affected employees who are both at the management and operations levels to ensure a smooth transition.
They will be paid a send-off package in line with their contracts for the restructuring to be done in three phases up to December.
The end of the exclusive dealerships is the latest huge blow for CMC, which is backed by the Dubai conglomerate Al Futtaim Group.
It marks the end of a glorious era for the CMC group, which has over seven decades distributed famous passenger car brands in Kenya and the region.
The troubled local car dealer has lost several lucrative franchises over the years amid shareholder rows over control.
Fortunes have continued to dwindle for the vehicle dealer even after it was delisted from the Nairobi Securities Exchange after being acquired by Al Futtaim.
Mr Eltaff linked the latest blow to various economic and operational factors, saying this had made it increasingly difficult to offload new passenger units as new car sales slow in Kenya.
"In the last few years, we have been confronted with rapid changes in market dynamics owing to the pandemic, production slowdowns and supply-chain disruptions, all of which have impacted the passenger vehicle market, not just in the region but globally," he said in a statement.
"We thoroughly studied the situation and took the decisive step to shift focus. It wasn't an easy choice for us, as we have been very proud to represent global automotive brands such as Ford, Suzuki, and Mazda."
CMC's remaining deals will see it distribute new Holland tractors, alongside an extensive range of farming implements from New Holland, Nardi and Fieldking. It will also distribute the Hero brand of motorcycles and scooters in its two-wheeler sector.
Following the deal termination, Ford will be distributed by Salvador Caetano - the official distributor of various automotive brands in Kenya, including Korea's Hyundai and French carmaker Renault, in the third Quarter of 2023.
Suzuki, on the other hand, will be distributed by Toyota dealer CFAO Motors Kenya from the second Quarter of 2023. Mazda will announce the new distributor in the coming months, The Standard has learnt.
Amid a slowdown in new car sales, imported second-hand cars from Japan and the Middle East have for years offered an affordable route to vehicle ownership in Kenya and dominated the market.
CMC lost its long-standing dealership for Land Rover after Jaguar Land Rover (JLR) shifted to the Thai firm RMA Group. It is now distributed by Inchcape.
The firm also lost the exclusive Volkswagen franchise to rival DT Dobie after the German brand decided to pull out over board wrangling that led to its delisting.
CMC however says it has already seen great promise in the agricultural sectors of Tanzania and Uganda, having sold tractors in 2022 within both countries.
