• This comes at a time when the industry trends show that sales on luxury vehicle brands such as BMW and Mercedes Benz, among others, drop by 65.5 per cent in the first quarter of 2023.
• The merger is expected to bring about an increase and sustainability in sales.
CFAO Motors (former Toyota Kenya) has announced an internal restructuring where DT Dobie has transferred its business assets to the automotive company.
This took effect from April 1, 2023.
The strategic reorganisation will see the respective businesses of CFAO Motors and DT Dobie being run under one entity, CFAO Motors Kenya Limited.
This comes at a time when the industry trends show that sales on luxury vehicle brands such as BMW and Mercedes Benz, among others, drop by 65.5 per cent in the first quarter of 2023.
Latest data from the Kenya Motor Industry Association (KMIA) shows luxury cars sold by DT Dobie and Inchcape Kenya dropped to 11 from 29 during a similar period last year.
The KMIA is the leading federation of companies in Kenya’s formal motor sector, embracing distributors of all the major vehicle marques, vehicle assemblers, component manufacturers, equipment agents, parts suppliers and many ancillary services.
In the period between January to March 2023, dwindling order demands were hurt by factors such as high vehicle prices and rising interest rates.
“Sales in the entire formal vehicle industry dropped 13.9 per cent to 2,758 units in the review period,” Kenya Motor Industry Association said in a statement.
As a result of the merger, the operations of CFAO will be managed by the CFAO Motors MD Arvinder Reel.
Speaking during the announcement, Reel said the first quarter drop in luxury models can be attributed to the low supply of the vehicles coming out to meet the demand.
“As CFAO, we have the order intake but we are not able to meet the 100 per cent demand. If we can get more vehicles and sell them, then we will see a recovery in the market,” he said.
The slump in car sales comes at a time when the country’s shilling is depreciating against the US dollar, as well as the Central Bank of Kenya’s move to hike interest rates, which have made procuring loans more expensive.
The automobile sector has faced multiple challenges including the weakening of the shilling and dollar shortage, which prompted dealers to raise prices in response.
While DT Dobie sold three Mercedes Benz from 11 previously, orders for BMWs and Range Rovers dropped to two and one from 10 and six, respectively.
Reel said that with the merger, they are expecting an increase and sustainability in sales.
“With a combined market share of 29 per cent, we are hopeful that our business will increase as we provide two-wheelers, entry-level, luxury models, as well as trucks to our customers,” he added.
“We are looking to grow it by another 5 or 10 per cent.”
In the previous quarter, while top dealers like Isuzu East Africa and Simba Corp recorded a drop in sales, CFAO Motors saw an increase in sales by 2.9 per cent having sold 793 units.
The automotive company’s operations will be divided into three main divisions.
CFAO Deputy MD Joshua Anya will head the Toyota and Yamaha division where he will oversee all Toyota business, Automark pre-owned vehicles as well as the Yamaha 2-wheel division.
He will also be responsible for the art, body and paint shop.
Speaking during the event, Anya said the integration provides them with an opportunity to provide customers with the right mobility solutions.
“This is a great opportunity for us and I look forward to working with all our customers and partners,” he said.
Anya also said through the Automark division, they will be looking into developing hybrid electric vehicles to match e-mobility market trends.
DT Dobie Deputy MD Chris Ndala will head the multi-brand and equipment division where he will oversee multi-brand passenger car makes.
This includes Volkswagen, Suzuki and Mercedes-Benz passenger cars.
The equipment division will include all the company’s truck and bus business with Hino, Hyundai, Mercedes Benz and Sinotruk (HOWO).
The Winpart and Autofast division will be headed by the COO Aderrahmane Mairi who will oversee the value parts as well as Autofast quick service stations which are in partnership with TOTAL Energies.
Reel said the back office support teams such as finance, corporate support, HR and customer relations have been consolidated to ensure the company operates efficiently.
“This new business positioning greatly enhances our automotive value proposition in the market with the largest portfolio of mobility solutions across the wide segment of customers as well as the largest after-sales service network in the country,” he said.
The new entity has also expanded the local assembly offering by CFAO Motors Kenya.
It has combined the assembly of LandCruiser 79 (LC79), Hilux pick-ups, Hiace, and Hino trucks at the Associated Vehicle Assembly (AVA) in Mombasa.
It has also combined the VW Polo, Tiguan, T-cross, Mercedes truck and buses as well as Hyundai trucks at Kena Vehicle Manufacturers (KVM) at Thika, Kiambu County.