Automotive Industry in Kenya: Dennis Awori Presents Toyota Kenya

Interview with Dennis Awori, Chairman of Toyota Kenya Limited

What is your assessment of the automotive industry in Kenya currently?

The automotive industry in Kenya is quite robust. In addition to vehicle distribution, we also have repair services, parts, sales, and local assembly. Unfortunately, at the moment, the sector is dominated by secondhand imports, approximately 100,000 per year, as opposed to new vehicle imports and sales, which account for only 20,000 units per year. This market has actually been growing over the last few years, although we have experienced a decline this year. Whenever we have an upcoming election, the market does fall a bit, so we were prepared and planned accordingly. Thereafter, we expect the market to continue to grow, due to the fact that compared to our neighbors, Kenya has a large, fast-growing middle class.

Toyota Kenya is the sole distributor and service provider of Toyota, Yamaha, Hino and Case IH brands in the country. Could you give us an overview of the company’s history and main business segments?

We pride ourselves in our current slogan, which is that you will love the “Toyota Experience.” We go the extra mile for our customers.

Toyota Kenya is a subsidiary of Toyota Tsusho Corporation, which is the trading, logistics, and investment arm of the Toyota Group. Toyota Tsusho Corporation, or TTC, first came to Kenya in 1964, which is also the first year that they imported Toyota vehicles to Kenya. They then opened a representative office which continued until 1999, when TTC bought 50 percent of the distributorship, which was run by Lonrho Motors at the time. The following year, they bought out the dealerships. The entire business was owned by TTC by 2000, and Toyota Kenya Limited was established. Ten years later, they registered Tsusho Capital which is our own in-house finance company that provides financing to new car sales customers. A year later, they opened Toyota Toyotsu Auto Mart Kenya Limited, to import, service, and provide spare parts for used car imports. We entered into that field because we recognized that used car imports are a large part of the motor vehicle market in Kenya. After that, we embarked on an investment program that included diversification from the motor industry into other important sectors of the economy. Even as we did that, we took on other franchises, namely the Case IH and Yamaha franchises, in order to add more available offerings to our customers. Kenya is an agricultural country, so the mechanization of agriculture is now very important, as well. We have also collaborated with the government to identify key sectors we wish to invest in. They include electricity from the renewable energy sector, infrastructure, agriculture, and water.

How long have you been chairman of the company?

I have been chairman since 2009 when I returned from Japan.

What are some of the company’s most significant success stories here in Kenya?

The most significant success was the taking over of the distributorship in 2000. At the time, the full distributorship with the dealers included branches in Nairobi and Mombasa. It was then built up to a network that now consists of six old branches, a similar number of dealers, and fourteen approved service centers. This considerably improved our offering to the Kenyan market. Another significant milestone was in establishing the in-house finance company, Tsusho Capital. The third success story was the establishment of the used unit outlet. By doing this, we created the only complete value chain in this market. This began with the local assembly of one Toyota model, the Land Cruiser pickup, as well as the assembly of the Hino truck and bus range, the selling of units through world-class showrooms, servicing, providing body and paint workshops, and eventually providing trade in an outlet for the vehicle at the end of use. Once a customer trades in the used vehicle, we then sell them a new one. We keep our customers in our value chain, throughout.

How would you describe Toyota Kenya’s philosophy and what makes you different from the competition?

We pride ourselves in our current slogan, which is that you will love the “Toyota Experience.” We go the extra mile for our customers. Ours is the only holistic approach and total value chain.

Are you involved with CSR? What do you do to follow the company’s motto of prospering together with people, society, and the globe?

In 2000, we started offering scholarships to blue collar trainees already at vocational training schools. We did not limit scholarships to people in technical training in motor vehicle mechanics. We had and continue to have nurses, electricians, contract workers, and plumbers getting scholarships under our Toyota Kenya Foundation. Three years ago, we registered the foundation as a full not for profit organization, and established the Toyota Kenya Academy. The Academy offers training in motorcycle mechanics, car mechanics, truck and bus, and agricultural equipment to our own technicians, and those technicians that are with our dealers and our fleet customers. Recently, in partnership with the Japan International Cooperation Agency, we began to offer agricultural mechanization courses to the public. Through our collaboration with USAID, we were then able to offer agricultural innovation programs to the public, as well. We offer training that is related to and targeted at our business sector, and also extend training to the public. It is a major contribution that we make to society. In addition, as TTC, we have established a social venture fund which is open to young entrepreneurs that want to scale up their businesses. The businesses must create new jobs, as well as have a social impact on their communities.

What are the main challenges to be faced by Toyota Kenya? What is being done to overcome these challenges?

The number one challenge is competition, but we are definitely up to the competition. This challenge is compounded when our competitors do not follow the rules and the laws of the country to the letter, especially when it involves payment of taxes and abiding by the regulatory framework. It is a challenge for us because we abide by a very strict code of conduct that is applied worldwide, and we have brought that to our business in Kenya. Expanding into new locations has also brought challenges, particularly buying land on which to develop new branches. When we show interest, the price of the land increases. But by and large, we have overcome those challenges.

You have branches and dealer representations throughout Kenya. What are your plans for expansion? Do you have plans to open new facilities in other countries?

In Nairobi, we previously only had the one outlet where our head office and our main showroom is. As the city has grown bigger and the traffic has become worse, our customers were finding it hard to access our main workshops. For that reason, we began to open branches in Nairobi. We already have three branches, in addition to our business park a few kilometers away from our head office. We still continue to look for locations to open additional branches so we that are closer to the customer and able to give a quality service in a convenient location. We are already present in the main cities and big towns elsewhere in the country. We have dealers in the smaller towns and we have approved service centers in the even smaller ones. The reason for this is two pronged. We want to be closer to all our customers, but we especially want to provide convenient service points for customers who have operation leases on our vehicles. Our foray into providing operation leases is another milestone that we are currently developing. We were the first to be chosen to provide vehicles on lease to the government to be used throughout Kenya.

Are you looking for partners or investors?

We are not currently looking for partners or investors in Kenya. We run our business regionally. We have invested into distributorships and run them as joint ventures in other countries, however. We are working to establish Toyota Rwanda as a joint venture through such as distributor. We have established Toyota Tsusho East Africa Ltd., which is our regional headquarters. It covers thirteen countries, including the six East African Community countries of Kenya, Uganda, Tanzania, Rwanda, Burundi, and South Sudan, as well as the Horn of Africa with countries of Ethiopia, Eritrea, Djibouti, and Somalia.

What would you like to achieve as Toyota Kenya in the next three to five years? What is your vision for the future of the automotive industry in Kenya?

As Toyota Kenya, we obviously want to be the dominant market leader. If you combine the imports of used and new units, we already are the market leader. We would like to be the dominant market leader in the new vehicle segment itself. In addition, we are working on how to increase the number of models that we assemble locally. Kenya prides itself on having a local assembly industry and wants to industrialize by 2030. The motor industry is one of the ways to accomplish this.

Why should the international audience, businesspeople, and possible investors considering the region, come to Kenya?

The East African region is the fastest growing region in Africa. Africa is the continent of the future because of its demographic, its size, and the commodities and minerals that are here. Within the East African region, Kenya is very much the hub and the right platform from which to launch into the region. Kenya is definitely open for business. We are doing good business as Toyota Kenya, and we welcome them.

In 2012, we signed an MOU with the Kenyan government’s Vision 2030 delivery board in which we committed to go into and invest in the key sectors. So far, we have built a 2 X 140 megawatt geothermal power plant for the Kenya Electricity Generating Company. We are looking for opportunities to invest as an Independent Power Producer. We also supplied the ship to shore cranes to the second container terminal that was recently commissioned. We have diversified into agriculture and we have just completed building a fertilizer plant in the middle of the Eldoret area, which is the bread basket of Kenya. We will continue to look for more investment opportunities.