Toyota, Mercedes brands to be sold under one roof

CFAO Motors Kenya Managing Director Arvinder Reel during the CFAO Motors Kenya Business Reorganization announcement at the Move pick hotel,westlands ,Nairobi. [David Gichuru, Standard]

Japanese backed trading conglomerate CFAO Group is now eyeing Kenyan market dominance after taking over DT Dobie Kenya assets under its local unit CFAO Motors Kenya, which deals in Toyota brands.

The firm confirmed the respective businesses of CFAO and DT Dobie, which holds the Mercedes brands franchise in the country, will be run under one entity, CFAO Motors Kenya.

The reorganised entity will hold a third of the new cars market.

"The internal restructure brings together two strong, well-established and respected automotive companies in Kenya which will continue to provide our excellent and diverse products and services under one entity, CFAO Motors Kenya Ltd," said CFAO group in a statement.

Full acquisition of DT Dobie and Toyota franchises by the Japanese conglomerate had raised concerns that the local subsidiaries could be merged to gain unfair advantage, including through cross-selling of a wide variety of vehicles.

A dominant auto dealer can also lock out its rivals from major tenders by riding on economies of scale to give relatively lower prices for its vehicles.

The firms yesterday refused to be drawn into the debate when asked questions on the same by The Standard.

They, however, said the new entity has also expanded the local assembly offering by CFAO Motors Kenya, combining the assembly of Land Cruiser 79, Hilux pick-ups, Hiace and Hino trucks at Associated Vehicle Assembly in Mombasa.

It also includes assembly of the VW Polo, Tiguan, Touareg, T-cross, Mercedes truck and buses and Hyundai trucks at Kenya Vehicle Manufacturers at Thika.

"CFAO Motors Kenya now has the largest dealer network in the country at 36 with the combination of branches, dealerships and authorised service centres," the firm said in the statement.

The Competition Authority of Kenya approved the deal in 2017.

In 2016, Toyota Tsusho Corporation acquired 100 per cent shares in French conglomerate CFAO.

Toyota had in the past said Toyota Kenya and the other dealers will continue to be managed separately despite their common ownership.

CFAO did not say how many staff will be sent home as a result of the restructuring.

"The back-office support teams such as finance, corporate support, human resources and customer relations have been consolidated to ensure we operate efficiently and provide the first-class service to you as our customers and stakeholders," it said.

The restructuring comes after another vehicle distributor, CMC Holdings, announced it had ended three dealerships for global brands, citing poor local sales.

CMC announced on April 24 that it will no longer distribute Ford, Mazda and Suzuki vehicle brands and would instead focus on the agriculture sector by supplying tractors and farming implements.

Suzuki will be distributed by CFAO Motors Kenya from the second quarter of 2023.

CMC Motors Group Managing Director Sakib Eltaff linked the end of the distribution deals to a decline in passenger vehicle sales over the years.