CMC Group has declared massive redundancies of 169 employees including the Group Chief Executive, shining spotlight on poor business environment.
In a notice dated 24th April, the company cited ‘considerable decline in passenger vehicle business due to poor economic conditions, slow growth in the new vehicle sector, a dwindling number of customers and competition from dealer groups’.
It noted that their three leading brands – Ford, Suzuki and Mazda terminated their distributorship contracts, making it difficult to continue operating normally.
It therefore decided to re-organize its business to focus on the agricultural sector.
“The company intends to undertake the redundancy in three phases as the distributors wind up their operations with CMC Group between 2nd quarter of 2023 and 4th quarter of the year. Please note that employees who work in admin and support, finance, IT, legal, logistics, senior management, parts, procurement, projects, sales and service departments will be affected by the redundancy”, the notice stated signed by Group Managing Director, Sakib Eltaff.
The redundancy commenced on April 25th, 2023.
Mr. Sakib said that the affected employees will be paid their terminal dues in accordance with their contracts as guided by the collective bargain agreement. This will include salary for the days worked up to the date of termination, salary in lieu of notice based on the number of years and CBA, and severance pay for each completed year of service based on the number of years and CBA. It will also include pay in lieu of leave days accrued but not taken.
In moving to the agricultural sector, the company will be hoping to pick lessons from Tanzania and Uganda where it sold record number of tractors in 2022. It is setting up an assembly plant in Uganda which it intends to tap for growth potential.
“CMC also intends to further solidly position itelsf in the two-wheeler sector as t explores the possibility to set up a two-wheeler assembly facility in Nairobi. Two-wheelers are an essential tool for trade in East Africa and a strong localization plan will enable the company to deliver on its promise of being customer-centric organization”, said Mr. Sakib.
The changes mean they will be moving awa from the mass-market passenger vehicle segment.
It will be moving to represent Salvador Caetano in the third quarter of 2023.
CMC has been in Kenya, Tanzania and Uganda for 75 years establishing a name in the automotive and agricultural sector.