Nissan dealer biggest winner of Sh3bn leasing contract

CORPORATE NEWS

A Nissan Kenya showroom on Nairobi’s Bunyala Road. PHOTO | FILE 

By ALLAN ODHIAMBO, aodhiambo@ke.nationmedia.com

IN SUMMARY

• Crown Motors will supply police with 350 units, General Motors East Africa 100 and Urysia 50.

Crown Motors, a new Nissan dealer in Kenya, is the biggest winner in a vehicle leasing tender that will see three firms supply the police service with 500 units worth over Sh3 billion.

General Motors East Africa (GMEA) will supply 100 units of its Isuzu trucks while Peugeot dealer, Urysia, will deliver 50 units of 4x4 utility vehicles.Sources familiar with the latest leasing programme told the Business Daily that Crown has been picked to supply 350 units of its Nissan pick-ups.

The three firms were picked last week, with losing rivals given a fortnight to challenge the awards.

This is the third tender under the vehicle leasing programme that the government started in 2013 in a bid to reduce the public transport budget.

The government previously bought vehicles from dealers and incurred the costs of insurance, maintenance and depreciation. Under leasing, the state pays a fee to the respective dealers who undertake to provide a certain number of insured and serviced vehicles over several years.

In the current plan, car dealers have committed to service the government vehicles for a period of four years or until they clock 160,000 kilometres, whichever comes first.

The government, in return, pays a monthly, quarterly or annual fee and returns the vehicles to the dealer once the contract expires.

The move by the government, which accounts for a quarter of all new vehicle sales, to lease is setting up winners in the tenders for an opportunity to grow their market share significantly.

READ: Boom for new car dealers as sales near record high

Crown, which started operations in 2014 after taking over the Nissan dealership from DT Dobie, had a market share of three per cent last year.

The 350 units it won in the leasing tender represents 56 per cent of the 604 units it sold in 2015, underscoring the impact of the deal on the company.

Urysia, another small dealer, also stands to gain from the 50 units allocation.

This will add to the 300 units recently delivered to the government by the Peugeot dealer which has not been a major player in government tenders in previous years.

For GMEA, the award adds to its established status as a major supplier to the government alongside firms like Toyota Kenya.