Tuesday, October 8, 2019


Portuguese conglomerate Salvador Caetano Group is locked in a partnership row with Simba Corporation's Renault car franchise, with the Kenyan motor dealer going to court in a bid to retain the business.
The move comes after the parties disagreed over new proposals to grow their joint venture, Caetano Formula East Africa, which was formed in 2014 to sell Renault cars in the Kenyan market.

According to court records, Caetano in September last year approached Simba with a new proposal to sell Hyundai vehicles and spares parts in Kenya. Simba declined the offer and the Portuguese multinational subsequently wrote to the Kenyan company on February 19, 2019 terminating the joint venture over failure to meet "defined objectives".
Simba sued Caetano to challenge the franchise termination and to stop the multinational from setting up shop on its own.
Nairobi's High court on July 1 threw out the application, noting that Caetano was free to choose its business partners.
"This is a country and jurisdiction where contracts are honoured and upheld. Parties have the freedom to enter into and to opt out of contracts as they wish," Justice Maureen Odero said in the judgement order.
"This court would be reluctant to compel a party to remain tethered to a contract where that party has already, in compliance with the said contract, indicated its intention to opt out of the agreement. The freedom of business association must be protected and upheld."
Simba's officials have said that the company has appealed the court decision. "We have appealed, and the matter is in court," said Dinesh Kotecha, Simba's chief executive.
The joint venture, in which Simba has a 20 percent stake, sold 130 new Renault cars last year, according to data from the Kenya Motor Industry Association (KMI). This represents nearly one percent of all new cars sold in the country.
For Simba Corp, the Renault franchise served to expand its portfolio of new vehicle brands which includes Mitsubishi trucks and Mahindra pickup trucks.
The company is fighting to keep the Renault dealership after losing the luxury BMW car franchise early this year to rival Inchcape Kenya. Caetano's move continues the musical chairs seen in Kenya's new-vehicle market where automakers are constantly reviewing their existing franchisees.
The churn, for instance, saw DT Dobie take over the Volkswagen dealership from CMC. DT Dobie lost Nissan franchise to Crown Motors while General Motors terminated Isuzu East Africa's sale of Chevrolet cars.

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