19 December 2007

Kenya: Saying Goodbye to Peugeot

Nairobi — Marshalls East Africa Limited has ended one of the longest running franchises in the motor industry.

The Peugeot brand has been the face of Marshalls since the company's founding in 1960, and the decision to end the 47-year franchise reflects the cut-throat competition in the sector.

According to the company's managing director, Ngovi Kitau, the brand is no longer selling enough units to justify holding onto the franchise.

However, Marshalls customers countrywide will continue to receive after-sales service, despite the move. "We at Marshalls would like to thank Peugeot for the cordial business relationship we have had in the last 47 years," added Mr Kitau.

Marshalls has been in partnership with the France based Peugeot since the 1960s. A couple of years ago the brand marked a watershed in Kenya after the last Peugeot 504 model was sold to a Marshalls customer. The model struck a romantic tone with die-hard Peugeot fans, most of whom bought their first car in the nineteen-sixties and seventies.

Since then, the firm has pumped money into promotions of the latest Peugeot models, ranging from the compact and 'sexy' 206 to the sleek 607 sedan, an effort that apparently failed to translate into strong sales. Mr Kitau, however, expressed optimism of remaining afloat in the business despite the loss of the partnership.

"The loss of the one franchise, though regrettable, will not affect our business in any way. Our customers can still depend on us for spare parts and routine service of their vehicles," said Mr Kitau.

The company's remaining franchises are for Tata, an Indian brand, Kia from Korea. The firm signed the deal with Tata at the beginning of November.

It also sells spares for Delta. Marshalls is a key player in the regional motor vehicle industry, with 11 branches and four dealers countrywide in major towns, including Nairobi, Mombasa, Nakuru and Eldoret. Poor performance of the franchise was partly attributed to the phasing out of tough Peugeot 504 and 405 models that were the bedrock of the franchise in the past.

Between January and November this year, car franchise dealers sold a total of 11,955 units, according to data from the Kenya Motor Industry Association.

Of these, one-tonne trucks accounted for the largest share of sales, at 2,828 units. The industry has complained of what it claims is the 'unfair' advantage held by importers of used and reconditioned cars.

The port in Mombasa is currently awash with imported used cars, with the Customs department of the Kenya Revenue Authority clearing an average of 700 units daily.

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