French tire manufacturer Michelin has announced a partnership with another French company CFAO to directly sell their brand in Kenya and Uganda in a move that is expected to stir the local market.
In a deal that was announced in France, the two companies announced a joint venture that will entail import and distribution of Michelin tires in the two East African countries at an ownership of 51 percent for CFAO and 49 percent for Michelin.
Michelin is a popular brand in East Africa with the other main distributor being Kingsway Tires, which uncharacteristically also stocks other brands from Europe, America and Asia.
However, it is not clear if the deal will still work with Kingsway Tires, with the two French companies announcing they will use Michelin’s longstanding partners in Kenya and Uganda.
This new entity will provide the two countries, with tires for cars, vans and light trucks, and it will also import heavy goods vehicle, two-wheel, civil engineering and agricultural tires.
According to Richard Bielle, Chairman and Chief Executive Officer of CFAO, Michelin wants to accelerate the distribution of its high-end tires, with their proven longevity and durability, by seizing this growth opportunity in two regional African powerhouses.
“With growth rates of 4.5 percent for Uganda and 5.5 percent for Kenya in 2017, these markets are very dynamic. As a result, they are of interest to the biggest players in the global industry. CFAO’s alliance with Michelin illustrates our know-how on the continent – providing our partners with immediate solutions to develop markets and to offer consumers high quality products and services,” he said.
Yves Chapot, Member of the Executive Committee of Michelin, Director of Automotive Business Lines and Regions Asia, Africa, India & Middle East, said the growth prospects of the African continent are immense. He said Michelin would want to offer Kenyan and Ugandan motorists and businesses, the best of our technologies to sustainably support their mobility.
“It is with this ambition in mind that we are working with CFAO, whose expertise and commercial footprint on the continent will be two of the levers for the success of this partnership serving our East African customers.”
The Kenyan tire market has been dominated by both local and European brands but there has emerged competition from cheaper tires from Asia. Yana tires, a leading local manufacturer announced it was closing its local manufacturing citing stiff competition from imported tires mainly from China and Malaysia.