Corporate News
DT Dobie managing director Zarak Khan. CMC Holdings has lost Volkswagen franchise to DT Dobie. PHOTO|FILE
By VICTOR JUMA
In Summary
- DT Dobie’s agreement with the VW franchise owners takes effect Friday, with the dealer set to begin selling the saloon cars in October.
- DT Dobie sees the takeover of the VW franchise as an opportunity to recover from the loss of its Renault and Nissan brands to rival dealers.
- The migration of VW to DT Dobie marks the latest setback to CMC which last year lost its most lucrative franchise – Jaguar Land Rover (JLR) – before losing Ford last month, significantly eroding its share of the new vehicles market.
Motor vehicle dealer CMC Holdings has lost the
Volkswagen franchise to rival DT Dobie, in the latest blow to the group
which was de-listed from the NSE this year after acquisition by a Dubai
conglomerate.
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CMC is expected to phase out the German-made VW brands from
its showrooms – which accounted for 12.3 per cent of its unit sales last
year – to pave the way for DT Dobie’s exclusive dealership in the
franchise.
“We now have the dealership rights to the VW brand
in Kenya and the other East Africa markets,” said DT Dobie’s chief
executive Zarak Khan in an interview Thursday.
He added that DT Dobie’s agreement with the VW
franchise owners takes effect Friday, with the dealer set to begin
selling the saloon cars in October.
The migration of VW to DT Dobie marks the latest
setback to CMC which last year lost its most lucrative franchise –
Jaguar Land Rover (JLR) – before losing Ford last month, significantly eroding its share of the new vehicles market.
The motor dealer lost JLR due to what the franchise
owners termed as sub-par sales and boardroom wrangles between September
2011 and February last year, but it is unclear why VW also opted out.
Ford Motor Company said it terminated CMC’s
contract due to the ownership change at the auto dealer. CMC was earlier
this year acquired by Dubai-based Al-Futtaim Group for Sh7.5 billion,
after its wrangling shareholders decided to sell the company.
DT Dobie sees the takeover of the VW franchise as an opportunity to recover from the loss of its Renault and Nissan brands to rival dealers.
“This not only offers us a chance to replace the
two brands but also an opportunity to do even better in terms of volume
sales,” said Mr Khan.
The company is working on branding its showrooms
with the VW emblems while its senior sales and technical staff are
overseas undergoing training ahead of the official launch.
For CMC, the loss of the VW threatens to further
cut its market in the increasingly competitive market that is seeing a
rise in dealership coups.
The company sold 134 units of VW last year, when
its market share stood at seven per cent. VW was CMC’s second biggest
brand after Ford in terms of unit sales.
Loss of the German brand will see the auto dealer’s market share fall below four per cent.
Ford Motor Company has not announced CMC’s replacement in Kenya and Uganda. RMA Kenya took over the JLR franchise from CMC in June last year.
The exit of VW means CMC will rely heavily on
trucks and bus sales after losing the last of its pick-up, SUV, budget
and luxury car brands. It has been left with UD trucks as its most
important brand, selling 131 units of the models last year.
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