The Competition Authority of Kenya (CAK) has approved the formation of joint venture between Toyota Kenya’s parent firm CFAO and Michelin to sell tyres locally and in Uganda.
This is contained in the notice by CAK director-general Wang’ombe Kariuki in the Kenya gazette published last Friday.
“ … it is notified for general information that … the Competition Authority has authorised the proposed transaction,” Mr Kariuki said.
This nod now paves way for the two firms to start selling premium tyres in the two East African markets. The firms had earlier said the transaction will accelerate the distribution of its high-end tyres.
CFAO and Michelin had in March last year announced conclusion of an agreement for the import and distribution venture.
This will be 51 percent owned by CFAO and 49 percent by Michelin while governance will be equally divided between the two firms.
This new entity will serve the countries, home to over 90 million people, with tyres for cars, vans and light trucks. It will also be importing heavy goods vehicle, two-wheel, civil engineering and agricultural tyres.
“The growth prospects of the African continent are immense. We want to offer Kenyan and Ugandan motorists and businesses the best of our technologies to sustainably support their mobility,” Michelin Member of executive committee Yves Chapot said of the deal last year.
Sameer Africa was the only domestic tyre manufacturer but closed down its factory in 2016 citing cheap and subsidised tyre imports that whittled its market share.
It then joined global tyre companies such as Kingsway, Apollo, Pirelli and Dunlop who operate in the Kenyan market through the import route.
Cheaper tyres from markets such as China are favoured by price-sensitive motorists. In the past, local manufacturers had raised alarm over uncontrolled flow of Chinese tyres into the region as they posed a threat to their businesses.