A motor vehicle company fully functional in East Africa is set to gradually withdraw its operations following a decision ‘in full compliance with local regulations and distributorship agreements.’
CMC Motors Group, a subsidiary of Al-Futtaim Group, has announced plans to shut down its 40-year business in Kenya, Tanzania, and Uganda, citing sustained market challenges, including economic pressures, currency depreciation, and rising operational costs.
In a statement released on January 17, 2025, CMC Motors Group said that the decision comes after a series of restructuring efforts, including a transformation program launched in 2023.
However, despite these efforts, the market conditions proved unsustainable for the business, leading to its eventual exit from East Africa.
“The company has been a significant player in East Africa for over 40 years, particularly supporting the agricultural sector with quality service, mechanization solutions, and unwavering customer support. However, the challenges we face today have made it impossible to sustain operations in this region,” the statement read in part.
CMC Motors Group’s presence in East Africa has been vital for the agricultural industry, providing essential mechanization and vehicle production services.
However, the company has faced mounting difficulties as a result of economic challenges such as currency depreciation and increased operational costs. These factors, compounded by the ever-changing economic landscape, have made it increasingly difficult for the company to maintain profitability in the region.
In a strategic move, CMC Motors Group had already retrenched 169 employees in 2023 as part of a broader restructuring effort to scale down its operations. Despite these efforts, the company stated that it could no longer find a viable path forward.
“While we have made every effort to restructure and adjust to the changing market conditions, the reality is that the financial outlook no longer supports continued operations,” the statement read.
The decision to cease operations underscores the severity of the market conditions that the company has been grappling with.
“Economic pressures, currency depreciation, and rising operational costs have been key factors in this difficult decision. We have been actively working to transform our business model, but ultimately, the local market conditions were not conducive to sustainable growth,” the statement emphasized.
The company has expressed its commitment to supporting employees during this transition. It has pledged to ensure a smooth and orderly wind-down, adhering to all relevant agreements and regulations to manage the closure responsibly.
“Our employees are at the heart of everything we do, and we are committed to supporting them throughout this process. This is a challenging time, but we will ensure they are treated fairly and respectfully,” it said.
CMC Motors Group, a subsidiary of Al-Futtaim Group since 2014, will continue to offer support to employees and customers as it phases out its operations. It also reassured stakeholders that the company would remain compliant with all necessary legal and contractual obligations during the winding-down process.
“As we close this chapter, we remain focused on ensuring a smooth transition. Our commitment to our employees, customers, and partners is unwavering, and we will work diligently to ensure that all operations are concluded in a responsible and compliant manner,” the statement concluded.
The company is working to ensure an orderly exit from East Africa, with full attention to the wellbeing of its staff and compliance with the local business environment.
