CMC Motors, the prominent auto dealer in Kenya, has revealed plans to lay off 169 employees as it pivots from the passenger car market to concentrate on agricultural machinery and a potential entry into motorcycle assembly. The announcement came in a letter sent to the Amalgamated Union of Kenya Metal Workers.
The layoffs, set to begin on Tuesday, will impact various departments, including administration, finance, IT, legal, senior management, parts, procurement, projects, sales, and service. CMC’s decision follows the liquidation of remaining inventory from their last franchises, Ford, Mazda, and Suzuki, as they transition to new dealers.
Sakib Eltaff, CMC’s Managing Director, stated in the letter, “CMC Group is reorganizing its business in line with a growth strategy that will see it place great focus on the agricultural sector.” He added that the terminated distributorship contracts and shifting market demand have necessitated declaring 169 employees redundant, affecting both management and unionizable positions.
Affected employees will receive a salary in lieu of notice, severance pay for each completed year of service, and other separation terms based on the number of years and collective bargaining agreement (CBA).
In a separate statement, CMC Motors announced plans to concentrate on the sale of tractors in the agriculture sector, while also exploring the possibility of establishing a local motorcycle assembly plant. This strategic shift signifies the company’s departure from the mass market passenger vehicle segment and the discontinuation of its representation for Ford, Suzuki, and Mazda in Kenya.
Ford is slated to transition to Salvador Caetano in the third quarter of 2023, while Suzuki will move to CFAO (Toyota dealer) in the second quarter of 2023. Mazda will announce its new distributor in the coming months.
CMC’s exit from the passenger vehicle sector provides a prime opportunity for competitors to acquire the franchises and expand their market share in this fiercely competitive industry. The addition of Ford will strengthen Caetano’s existing dealership, which includes Renault, Hyundai, and Kia cars in the Kenyan market. CFAO, already the second Suzuki dealer, will now exclusively sell the Japanese brand. Meanwhile, the Mazda franchise remains available.
Ford had been CMC’s most vital franchise, accounting for 78.7% of the company’s total vehicle sales last year, according to industry data. CMC sold 388 Ford pick-ups and sports utility vehicles in 2022, marking a 13.1% growth from 343 units the previous year. However, data from the Kenya Motor Industry Association (KMIA) indicates that CMC’s sales of American vehicles have fallen by more than half since their 2015 peak of 927 units.