VENTURES AFRICA – Jaguar Land Rover has accused CMC Holdings and chief executive Bill Lay of lying and performing badly after it terminated its distribution agreement with the Kenya-based firm.
The automobile company transferred the exclusive distribution rights in Land Rover Defender, Jaguar and Range Rover brands to rival RMA Group from February 3 this year.
CMC sought a court order preventing the termination in December, claiming Jaguar was driven by malice, but lost the case this week. In the aftermath of the court case, Jaguar’s operations director for sub-Saharan Africa Nigel Clarke called Lay a liar over claims he made in an affidavit.
Lay claimed that he was unaware that Jaguar had called for competitive tendering for the franchise held by CMC, and was surprised when the contract was handed to RMA.
Clarke said the notice remained effective during Jaguar’s further engagement with CMC and that it had been made clear to CMC and Lay that they were reviewing their options in Kenya.
“I vigorously deny Mr Lay’s assertions that JLR agreed to continue with the relationship at any time after the issuance of the termination notices,” he said. He argues that CMC was fully aware that it was participating in a competitive bid, even though it now denied all knowledge, and that the agreement signed had never been exclusive.
He also said any dispute could only be settled in an English court as the agreement was crafted under English law.
“I verily believe that this honourable court has no place in re-writing the contract … any perceived breach of which may only be dealt with under English Law, by the English Courts or through any arbitration commenced under the specific provisions of the contract,” he said.
Jaguar claimed it had terminated the franchise with CMC due to poor credit rating, non-payment of debts and lack of quality showrooms and service centres.
“CMC’s performance as a JLR dealer had been substandard and was among the worst in the region,” Clarke said. Jaguar had previously accused the company of underinvestment in showrooms and marketing. CMC sales of Jaguar brands had also been steadily falling, according to Kenya Motor Industry data, from 661 units in 2007 to 292 units in 2010, though sales increased to 404 last year.
Jaguar brands previously accounted for 30 percent of CMC’s annual unit sales. The loss of the franchise could have serious repercussions for a firm who have seen operating profits fall since 2008. They also recently lost the exclusive dealership of MAN trucks.