Toyota Kenya is adding tractors to its product range as the Japanese firm seeks to cut its reliance on the sluggish saloon car market.
The firm last month established an agriculture division with the Yanmar and Case brand of tractors, targeting increased demand for the machines by the government and private sector investors.
This is the latest diversification effort by Toyota after the introduction of the Hino brand of trucks and buses last year to gain from increased demand for commercial vehicles.
The tractor business will put Toyota in a head-to-head battle with CMC Motors, Tata Africa and FMD East Africa.
“We have established an agriculture equipment division. We are going beyond the motor vehicle business,” Dennis Awori, Toyota’s chairman told Business Daily.
“We are starting with Case and Yanmar tractors,” he said.
Yanmar tractors are produced by Japan-based Yanmar Company and will target small scale farmers with its relatively smaller diesel engines while Case tractors and harvesters will cater for large-scale farmers—giving Toyota a wider presence in the farm machinery business.
The agriculture division is being run by Toyota’s parent firm, Toyota Tsusho East Africa, which owns two other local dealers, DT Dobie and Cica Motors.
Its entry in the farm machinery business comes as Kenya witnesses a growing demand for tractors which is expected to rise further with the government’s push to launch mega irrigation projects.
The government last week launched the one-million-acre Galana-Kulalu irrigation scheme at the Coast that is billed as one of the largest agricultural projects in the country.
Private investors and the government will invest jointly in the scheme that will rev up demand for farm machinery. The Galana project will cost Sh250 billion over the next five years.
Other large-scale agricultural projects include the Tana Delta sugarcane farming project by Mumias Sugar that will cover thousands of acres and is expected to break ground in August. The bulk of Kenya’s tractors are sold to dealers in the sugar industry.
Data from the Kenya National Bureau of Statistics shows that 1,420 tractors were sold in the nine months to September last year, a 37.9 per cent growth over the 1,029 units sold the year before.
The 1,420 units is a record for the industry and beats the previous annual sales, underlining the rising demand for farm machinery.
Toyota will be competing against other players in the agriculture equipment business including CMC Holdings which deals in New Holland and Bobcat brands, Tata Africa, the distributor of John Deere brand, and FMD East Africa which sells the Massey Ferguson brand.
The increased diversification efforts are aimed at cushioning the firm from a sluggish performance in its saloon car business.
Weak demand in the passenger car segment saw Toyota lose its market leadership in the new vehicle market to rival General Motors East Africa (GMEA) in 2010.
Toyota’s market share has dropped from a high of 26.6 per cent in 2005 to 24 per cent last year. GMEA maintained its top position last year with a 27 per cent market share.
Source: BUSINESS DAILY