CMC Holdings has lost the exclusive dealership of MAN trucks after franchise owners appointed a second dealer, RT East Africa, to distribute the commercial vehicles.

The appointment is likely to slow down the earnings of CMC whose sales have fallen in the past two years largely on austerity measures by the government, its single biggest client which accounts for a quarter of all unit sales.

RT East Africa, part of the Multiple Group that also deals in Volkswagen commercial vehicles and Randon trailers, will now sell MAN buses and trucks in Kenya, Uganda, Tanzania, and South Sudan.

“With RT (East Africa) Limited and CMC Motors Group, we are confident that MAN Truck & Bus will be a major player in the EAC, because we will be backed by two formidable groups in the motor vehicle industry in this region,” Shane Naidoo, the head of MAN Sub-Equatorial Africa, said.

CMC acquired the MAN franchise in 2010 in a move that boosted its presence in the heavy commercial vehicle segment where it already had Nissan Diesel and Iveco brands.

CMC’s loss of the exclusive dealership has been linked to sluggish sales of MAN trucks. The company has also been rocked by shareholder wars since last year which have seen several directors leave its boardroom.

Data from the Kenya Motor Industry Association (KMI) show that CMC sold 50 units of MAN trucks in 2010, four and 43 units in 2011 and 2012 (January to September) respectively.

Multiple Group acquired the dealership through its transport subsidiary Multiple Hauliers, which was a major buyer of the trucks from CMC.

“Given the strength of the RTEAL Group and knowledge of the transport industry in EAC, we are confident that we have chosen the right partner,” said Mr Naido.

The loss of the exclusive franchise to RT East Africa comes at a time when CMC is under pressure from vehicle manufacturers Jaguar Land Rover, Volkswagen, and Ford to boost sales by investing more in their brands, including building modern showrooms.

The three franchise owners account for 70 per cent of CMC’s annual unit sales, underlining their importance to the auto dealer. CMC said it would comply with demands of the franchise owners.

“We have the continued support of the franchise owners and we are working to meet their expectations,” said Joel Kibe, the CMC chairman.
CMC more than tripled its net profit in the six months ending March, helped by foreign exchange gains.

The dealer’s net profit stood at Sh383.5m in the review period compared to Sh120.1 million a year earlier as sales increased to Sh6.3 billion from Sh6.1 billion. Its sales of vehicles declined to 1,163 units from 1, 202 as it booked Sh450 million in foreign exchange gain from a loss of Sh106 million.