Kenyan dealer loses Porsche franchise

Porsche Centre Nairobi at Sameer Business Park. FILE PHOTO | NMG

By VICTOR JUMA
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Summary

• The franchise owner, Stuttgart-based Porsche AG, is expected to transfer the dealership to a new entrant or one of the existing dealerships in the local market.
• Porsche Centre Nairobi and Bentley Nairobi have common ownership through their parent company Multiple Hauliers.
• The reason for the termination of the dealership agreement was not immediately clear but sales of the luxury sports cars have dwindled in recent years.

Porsche Centre Nairobi, the Kenyan dealer which has been selling the high-performance German sports cars, has had its contract terminated effective the end of this month.

The franchise owner, Stuttgart-based Porsche AG, is expected to transfer the dealership to a new entrant or one of the existing dealerships in the local market.

Other dealers of luxury cars are DT Dobie (which sells Mercedes Benz), Inchcape Kenya (Jaguar, BMW and Land Rover) and Bentley Nairobi (Bentley). Porsche Centre Nairobi and Bentley Nairobi have common ownership through their parent company Multiple Hauliers.

Sources familiar with the matter told Business Daily that Porsche Centre Nairobi will continue to offer parts and service to clients until March.

The reason for the termination of the dealership agreement was not immediately clear but sales of the luxury sports cars have dwindled in recent years.

Porsche had not responded to our request for comment by the time of going to press.

The dealership was well received when it opened in May 2014, with sales rallying to 125 units within the first eight months.

Orders for the models, led by the popular sports utility vehicle (SUV) Cayenne, stood at 102 units in 2015 and dropped to 54 units the next year as the slump continued.

The dealer had sold a cumulative 420 cars as of November, according to data from the Kenya Motor Vehicle Industry Association (KMI).

Showroom prices of the Porsche cars range from Sh10 million to Sh28 million, meaning that the dealer has generated sales of at least Sh5 billion over the past seven years.

The strong initial sales were linked to a huge pent-up demand for the sports cars among wealthy individuals who could now enjoy access to parts and service from a local dealer.

Buyers of the Porsche models previously had to import them and face the challenge of sourcing parts and mechanical expertise on their own.

The weaker sales recorded by the dealer in recent years has been attributed to a mix of internal and external factors including stockouts of cars, higher taxes and stricter lending standards by banks.

Porsche’s move continues the musical chairs seen in Kenya’s new vehicle market where automakers are constantly reviewing their existing franchisees.

The churn, for instance, saw DT Dobie take over the Volkswagen dealership from CMC, DT Dobie lose Nissan franchise to Crown Motors and General Motors terminate Isuzu East Africa’s sale of Chevrolet cars.