Japanese multinational Toyota Tsusho has taken full control of Kenyan motor vehicle dealers DT Dobie and CICA Motors after buying all the shares from their parent company, CFAO Group. DT Dobie is the authorized dealer of:
- Mercedes Benz passenger cars and trucks
- Volkswagen passenger and commercial vehicles
- Greatwall Pickups
On the other hand, CICA Motors is the exclusive Kenyan distributor for two globally renowned brands:
- Hyundai Motors Commercial Vehicles
- SYM motorcycles.
Toyota Tsusho is the global trading arm of the Toyota group. CFAO Group, which was listed on the Euronext Paris stock exchange, was last valued at $2.5 bn, and will be delisted following its acquisition.
Toyota acquired a 97.8 percent stake in CFAO in December 2012 for $2.3 bn (Ksh.243.7 bn), at a valuation of 18.9x P/E, and last month bought the remaining 2.2 percent for $54 mn (Ksh.5.4 bn) at a valuation of 23.6x P/E, which represents a discount of 30.8 percent to the market average of 34.1x P/E.
The buyout of DT Dobie and CICA adds to its full ownership of Toyota Kenya, with Toyota Tsusho now controlling a total market share of 24.5 percent in Kenya’s new vehicle market, second behind leaders General Motors East Africa, who have a market share of 34.5 percent.
Toyota, DT Dobie and CICA now have seven franchises combined, including rights to distribute Mercedes Benz, Volkswagen, Jeep and Hino. This makes the combined operation one of the most diversified alongside CMC Holdings, which deals in Ford, Suzuki, Maruti, MAN and UD among others.
The acquisition of CFAO is aimed at helping Toyota expand its footprint in Africa’s automotive distribution business. This PE investment is driven by:
- Policies that promote local content that is being instituted by countries like Kenya: These policies have resulted in restrictions on imports of second-hand vehicles as well tariffs on new vehicles.
- The expanding transport corridor projects in East Africa: The improvement of East Africa’s transport network is expected to reveal greater logistics opportunities and increase the demand for commercial vehicles.
- Growing demand for passenger cars in Sub-Saharan Africa: The demand for passenger and luxury cars is driven by increased levels of disposable income, improved road conditions and a young, vibrant population seeking increased mobility.