Michelin targets the market for tyres in East Africa
Michelin Tyres is targeting Africa to further consolidate its sales and distribution network in East Africa and has partnered with CFAO, a renowned distributor of industrial products with outlets and distribution networks all across Africa. The joint venture between Michelin Tyres and CFAO will oversee the import and distribution of high-quality tyres in Kenya and Uganda.
A new company has been formed specially for this joint venture in which Michelin holds a 49 percent share and the remaining 51 percent are with CFAO. Administration of the new entity will be divided equally between Michelin Tyres and CFAO.
The new company will supply tyres for both heavy duty as well as smaller vehicles. This will depend largely on the business relationships built by Michelin over the years.
“With growth rates of 4.5 per cent for Uganda and 5.5 per cent for Kenya in 2017, these markets are very dynamic,” adds Richard Bielle, chairman and chief executive officer of CFAO. “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.”
This new development is just another case of Michelin's objective of acquiring a stake in the distribution channels of its closest competitors. One of Michelin's acquisitions Ihle Holding AG has also been used in the acquisitions of German-based whole sellers.They have also entered into a 50-50 partnership with Nex Tyres SL in a wholesale joint venture in Spain. The company announced another identical venture earlier this year in North America with Sumitomo Corporation to tap the markets in the US and Mexico.
Tyre sales in East Africa have been rising over the years and have made East Africa an attractive market for tyre dealers, manufacturers and stockists. many tyre dealers in Dubai have been actively supplying all kinds of tyres, tubes and batteries to the East African markets like Kenya, Uganda, Tanzania, Rwanda, Burundi, Ethiopia and Sudan.
As demand for tyres increases in East Africa, more and more multi-nationals are expected to enter the fray and expand their sales and distribution networks by appointing agents and distributors for their products.
