CMC exits passenger cars dealership as demand wanes

By Stephen Macharia

CMC Motors Group has announced that it will be shifting its business focus to the agricultural sector after announcing its exit from the passenger vehicle market.

In a statement, CMC said that it will shift its focus to the sale of tractors, and is also exploring the possibility of establishing a local assembly plant for motorcycles.

According to the CMC Group managing director Sakib Eltaff, the market has experienced a considerable decline in the passenger vehicle business due to poor economic conditions, slow growth in the new vehicle sector, a dwindling number of customers and competition.

CMC is in the process of clearing the remaining stocks of vehicles under the Ford, Mazda, and Suzuki brands, the last franchises it holds. These brands will be transferred to new dealerships.

 “As a result of the termination of these distributorship contracts coupled with the changes in the market demand, CMC Group is reorganising its business in line with a growth strategy that will see it place great focus on the agricultural sector.”

The motor dealer, which commenced vehicle assembly in Kenya in 1974, is set to lay off 169 employees. In a letter sent to the Amalgamated Union of Kenya Metal Workers, the company stated that the job cuts will impact roles in senior management, administration and finance, IT, legal, sales, and service.  The redundancies were scheduled to begin in April.

Eltaff noted that the company will use separation terms prescribed in employee engagement contracts such as a salary in place of notice and severance pay for each completed year of service.

By dropping Ford, Mazda, and Suzuki passenger cars, CMC moves away from the mass market vehicle segment. This provides business opportunities for its rivals to pick up the franchises.  The move by CMC signals a difficult operating environment for new vehicle dealers as vehicle prices soar.

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