Vehicle sales in Africa have risen significantly in the last few years, following growing demand among the continent’s burgeoning middle class that are trading up public transport and jalopies for new personal cars. Competition is rife in the auto industry as existing global brands and new entrants fight off competition from second-hand cars. [hidepost=9][/hidepost]
Thailand-headquartered RMA Group expanded to Kenya earlier this year following an opportunity created by the review of the Jaguar Land Rover distributorship contract. Previously, the Jaguar Land Rover franchise deal was held by the CMC Holdings which is set to be acquired by Dubai-based conglomerate Al-Futtaim Group for US$86m.
According to Sanjiv Shah, CEO of RMA Motors Kenya, the group’s expansion in Africa has been driven by “simple mathematics”, adding that South Africa, which “is the biggest market for consumer goods in Africa”, and other countries such as Kenya and Nigeria offer immense opportunity.
RMA Group employs over 7,000 people worldwide and is one of the world’s largest Jaguar Land Rover dealers with businesses in more than 64 countries. In Africa, RMA has a presence in 20 countries with offices in South Africa, Liberia, South Sudan and Kenya.
“Our Kenya position [suits] us well to actually manage and look at other markets” as Kenya is a regional hub, has a port and national carrier Kenya Airways which offers direct links to the rest of the world.
RMA is targeting Kenya’s rising middle class and “a few established families” that are loyal to RMA’s brands. Shah explains that over 50% of RMA sales have been to private enterprise buyers and the majority of the balance has been to corporates. The Jaguar Land Rover brand competes with other premium products like BMW and Mercedes-Benz.
“The rising middle class are very assertive on what they like and what they don’t like,” says Shah. “The middle class in Kenya are particularly choosey. They like quality, they like design and they like exclusivity. All of these are in the heart of our brand values.”
High taxes and duties
Shah notes that while the rising middle class is a significant market for auto dealers, finding staff who are adequately trained and experienced to serve this market can be challenging.
“We have got customers that are extremely demanding and extremely fussy about what they want. So the biggest challenge we have at the moment is finding the right people that have got some experience – they don’t have to be boffins in our industry – that can join us and hit the deck running.”
Exorbitant taxation, Shah says, is also a major concern.
“Quite frankly, the duties and taxes on new cars are huge and as result of that the ticket price you see is not the manufacturer’s price at point of origin, and our profits are not that huge. A majority of the portion is duties and taxes. From a cumulative point of view… if you took $1, it turns out as a $1.83 plus duties and taxes because it’s compounded.”
Offering buyer finance
To tap into this market, RMA has introduced purchase options such as lease and finance schemes that enable more people to access vehicles they feel would ordinarily be out of their reach.
After a successful year of setting up operations, interacting with customers and establishing a showroom, RMA Motors is confident it will make impressive sales next year.
“If we are able to fulfil the 200-plus numbers on the premium products for next year we will have done our job,” says Shah. “Money is the market [and we are introducing] the tools to make purchasing easier. I am always wary of competition so I am not going to sit on my laurels and I am not going to be complacent but I am quietly confident that we have an advantage at the moment and we need to materialise that.”
Shah advises other business leaders to strive to achieve a balance between business needs and their team’s needs.
“People are your biggest assets. If you attract the right calibre of people to join the business, everything becomes interactive; you have customer-to-team relationships becoming easier. Keep an open mind, interact with your team and understand your team’s needs.”
Noting that being a CEO is a “huge responsibility”, Shah says he is “excited and delighted” to be in his position.
“At times it’s very frustrating but it puts a smile on my face… I realise that I am in a very privileged position,” says Shah. ”I have every reason to be thankful and excited to be in this position.”