Toyota Kenya and other African subsidiaries of its parent firm Toyota Tsusho Corporation (TTC) will be making vehicle purchase orders directly from the factory without going through sales and marketing representatives of automaker Toyota Motor Corporation (TMC).
The move is aimed at increasing efficiency and competitiveness of the vehicle dealerships in the continent.
TTC is the distributor of TMC’s vehicles in various African countries including Kenya where it owns Toyota Kenya Limited.
“On June 1, 2018, the group and TMC entered into a memorandum of understanding regarding a transfer of TMC’s entire sales and marketing operations in the African market to the group by a tentative date of January 2019,” TTC said in a trading update.
“The group and TMC have since been formulating an action plan to execute the transfer of operations.”
The Japanese automaker, which owns a 21.69 per cent stake in TTC, has a marketing office in Japan coordinating sales of vehicles in African countries from its subsidiary Toyota South Africa.
Dennis Awori, the chairman of Toyota Kenya, said the company will benefit from TTC’s direct placement of orders to the factories and its handling of logistics.
TMC said the operational restructuring is meant to sharpen Japanese firms’ focus amid an increasingly competitive business environment.
“In this urgent time, there is no room for intra-group competition; the future of the Toyota Group depends on enhancing its competitiveness as a united whole,” the Japanese vehicle manufacturer said in a statement.
The multinational says TTC is well placed to take over all its sales and marketing functions in Africa where it has decades of experience.
TTC has operations in 53 African countries where it employs more than 10,000 people. Its presence in the continent got a big boost when it bought out French conglomerate CFAO Group in 2012, bringing dealers like Kenya’s DT Dobie into its fold.
An earlier version of this story erroneously stated that Toyota would “shut down its Africa sales offices including Nairobi.” The correct position is that the Toyota Nairobi office remains open, but will now be ordering vehicles directly from the factory (as opposed to through the sales and marketing office of Toyota Motor Corporation) following re-organisation of the company’s marketing operation.