Motor vehicle dealer CMC Group is set to lay off 169 staff following the end of crucial partnerships that have hugely dented key sales prospects and revenues that have now left it incapable of sustaining the huge workforce.

The redundancy exercise will be in three phases and will take place between April and December 2023 as the firm now switches focus to tractor sales to support the agriculture sector.

Layoffs commenced yesterday with the departments of  legal, logistics, finance, administration and support, information and technology (IT), sales, procurement, senior management, parts, projects, and service being affected.

The firm has linked workforce reduction to tough economic conditions, stiff competition, a dwindling number of customers, and sluggish growth in the new vehicle sector.

Dealerships termination

CMC, a subsidiary of the Dubai-based multinational Al-Futtaim Group, has terminated or received notice of termination of exclusive dealership rights with Ford, Suzuki, and Mazda brands, with the existing contracts expected to end in the third quarter of 2023.

The termination of the franchise comes after it lost its Renault truck business to rival dealer Caetano Kenya last year after the contract expired. It equally cut ties with the Jaguar Land Rover (now by Inchcape) brand. Caetano, one of the small dealers undergoing a massive expansive drive now has Ford, Hyundai, Renault, and KIA under their distribution rights. It has a presence in Senegal, Gambia, Tunisia, Angola, Guinea Conakry, Liberia, Mauritania, and Cape Verde.

“As a result of the termination of these distribution contracts coupled with the changes in the market demands, CMC Group is re-organizing its business in line with a growth strategy that will see it place great focus on the agriculture. This will result in a reduction in the number of roles and the resources required to execute the remaining functions,” the Group’s Managing Director Sakib Eltaff said in the notice.

Business strategies

The tough environment has seen automotive players overhaul their business strategies and constantly review existing franchisees.

Kenya Motor Industry Association (KMIA) figures show that car sales fell by 14 per cent year–on–year last month on the persistent harsh economic environment.

The industry sold a total of 2,758 units by the end of March, 445 units less than it managed in a similar period last year.

CMC is exploring options to unleash a two-wheeler assembly facility in Nairobi to retain its name in a market that will now spit it into competition with frontiers like Honda, Makindu Motors (Skygo), and Toyota Kenya which produces the Yamaha brand.