CMC Motors Group, a key player in East Africa’s automotive industry and the largest distribution network in region for sales, parts and service, has announced plans to gradually cease operations in Kenya, Tanzania, and Uganda.
The decision, which is made in compliance with local regulations and existing distributorship agreements, is attributed to persistent market challenges that have made it increasingly difficult to sustain operations.
For over four decades, the subsidiary of CMC Holdings Ltd, which was acquired by the Al-Futtaim Group in 2014, has been a cornerstone in the East African agricultural sector, delivering high-quality services and mechanization solutions. The company has built a reputation for steadfast support to its customers, helping to enhance productivity and efficiency in the agricultural domain.
However, despite various restructuring efforts including a transformation program initiated in 2023 aimed at revitalizing the business, the prevailing market conditions have ultimately proven unsustainable. From global economic pressures to the depreciation of local currencies, and increasing operational costs, the business environment has become untenable.
This move will affect the companies’ operations in the region including subsidiaries such as Cooper Motor Corporation (Uganda) Ltd, Hughes Motors (Tanzania) Ltd, and Kenya Vehicle Manufacturers Ltd, whereby it has a 33% stake.
CMC Motors Group has pledged to provide support for its employees and ensure that the wind-down of operations is conducted smoothly and orderly. This will be done in accordance with all relevant agreements and regulations, emphasizing the company’s commitment to responsibility and adherence to fair practices.
However, this will still have a profound impact on its employees, many of whom have dedicated years to the company. The loss of jobs not only threatens their livelihoods but also affects their families and communities. Additionally, the agricultural sector, which relies on CMC Motors for essential mechanization and support services, may face a downturn as farmers lose access to critical resources.
It is also likely to further exacerbate the unemployment crisis in Kenya and East Africa, where job creation has struggled to keep pace with a growing population. High unemployment rates, particularly among the youth, make these situation even more precarious, as displaced workers will compete for limited opportunities in other sectors.
To address these challenges, it is vital for governments and stakeholders in East Africa to implement strategies that mitigate the impact of such closures.
Initiatives focused on retraining and reskilling displaced workers, along with fostering entrepreneurship and small business development, can help create new job opportunities.
By diversifying the economy and reducing reliance on a few key players, the region can work towards a more resilient job market in the face of these economic shifts.
