CMC Motors Group has announced its decision to cease all its operations in Kenya and two other countries which will result in mass job losses.
The Group on Friday, January 17, 2025, announced its decision to gradually wind down operations in Kenya, Tanzania, and Uganda in full compliance with local regulations and distributorship agreements, ending over 40 years of business in the region.
According to CMC, the decision follows a thorough evaluation of the business considering sustained market challenges.
“This decision follows a thorough evaluation of the business in light of sustained market challenges, including economic pressures, currency depreciation, and rising operational costs,” read part of the statement.
The company owned by CMC Holdings Ltd and acquired by the Al-Futtaim Group in 2014, explained that over the past 40 years, it has played a vital role in supporting East Africa’s agricultural sector.
This is through the delivery of quality service, mechanization solutions, and steadfast support to its customers.
CMC Motors Shuts Down in Kenya, Uganda and Tanzania
However, the company said that despite restructuring efforts and a transformation program initiated in 2023, the market conditions have not provided a sustainable path forward.
The company has announced that it committed to supporting its employees during this transition and will ensure a smooth and orderly wind-down in adherence to all relevant agreements and regulations.
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In Kenya, CMC Motors started vehicle manufacturing in 1976 with the first car rolling off the assembly line in August 1976
Cumulative production since inception stands at approximately more than 60,000 cars, according to its website.
The plant was originally designed to produce light and heavy commercial cars including Land Rovers, Range Rovers, Volkswagen Microbuses, Leyland trucks and Buses.
The car model range produced also included Nissan Series, Mazda, Nissan Diesel (UD), Jaguar, MAN, Mercedes and Iveco.
This comes after CMC Motors retrenched 169 employees as a consequence of its exit from the passenger vehicle market less than two years ago.
Layoffs in 2023
The announcement was announced by the company in a letter to the Amalgamated Union of Kenya Metal Workers back in April 2023.
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The job cuts affected those employed in administration, finance, IT, legal, senior management, parts, procurement, projects, sales and service.
Notably, the move came as CMC cleared the remaining stocks of vehicles under the Ford, Mazda and Suzuki-the last franchises it was holding, and which were transitioning to new dealers.
“As a result of the termination of these distributorship contracts coupled with the changes in the market demand, CMC Group is reorganizing its business in line with a growth strategy that will see it place great focus on the agricultural sector,” Sakib Eltaff, the managing director of CMC, wrote in the letter dated April 24.
“This means that it will become necessary to declare 169 employees redundant. The employees affected are in both management and unionisable categories.”
The company back then said it would pay each employee a salary in lieu of notice based on the number of years and collective bargaining agreement (CBA) and severance pay for each completed year of service based on the number of years and CBA, among other separation terms.
At the time, CMC revealed that it would focus on the agriculture sector through sale of tractors, adding that it was also exploring the possibility of venturing into the motorcycle business by establishing a local assembly plant.
Other trading subsidiaries owned by CMC Holdings Ltd include Cooper Motor Corporation (Uganda) Ltd. Hughes Motors (Tanzania) Ltd. Kenya Vehicle Manufacturers Ltd (33% Shareholding).
Tough economic times
The notice by CMC Motors also comes just after the end of 2024 which was a year of mixed fortunes for businesses operating in Kenya, marked by economic uncertainties, shifting consumer trends, and a challenging regulatory environment.
Several companies, local and international, made the tough decision to exit the Kenyan market, shut down operations entirely or announced mass redundancies.
The British American Tobacco (BAT) Kenya back in December 2024 announced a restructuring plan that will result in job losses.
In an internal memo sent to all employees, the BAT Kenya’s management issued an update on the simplification of its Nairobi manufacturing factory operations, warning that it will result in a staff reduction exercise.
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