CMC loses Volkswagen to DT Dobie in fresh blow

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.

CMC introduced the VW franchise in 2009 after the government picked the brand to replace luxury cars such as Mercedes and Range Rovers that were deemed to cost more in terms of showroom price, maintenance and fuel consumption.