CMC has relied heavily on the passenger car segment led by its Ford dealership, with the Renault Trucks deal also helping the company to rebuild its franchise portfolio.
The company’s past failure to invest in its brands and boardroom wrangles led to the defection of several major automakers including Jaguar Land Rover (JLR) and Volkswagen which transferred their franchises to RMA Kenya (now Inchcape Kenya) and DT Dobie respectively.
This marks a significant franchise acquisition by CMC under the ownership of Dubai-based Al Futtaim Group which took over the company in 2014 at a price of US $74 million.
Unlike cars, most heavy commercial vehicles are bought new from local official dealerships and have higher margins, with demand coming from the trade, transport, construction and mining sectors.
“East African economies continue to grow, creating demand for heavy commercial vehicles. This demand is driven by the end-to-end logistics for industries, retail and agricultural production,” Renault Trucks Africa Vice President Cyril Barille said in a statement. Heavy duty trucks account for 37.6 per cent of all new vehicle sales, making them the largest single vehicle class, according to data from Kenya Motor Industry Association (KMI).
French multinational Renault Trucks is owned by the Volvo Group. The agreement with CMC will give it access to the dealer’s distribution network comprising eight branches across Kenya and a central warehouse in Nairobi.
The Renault trucks will be assembled at Thika’s Kenya Vehicle Manufacturers (KVM) which is partly owned by CMC.
CMC chief executive Noel Mabuma said the Renault Trucks dealership gives the company a presence in the heavy commercial vehicle segment which is also benefiting from the nascent leasing model. “This has created interest from both financial service providers and logistics firms looking to supply the government and other contractors with equipment,” Mabuma said.