Toyota by CFAO: Breaking TNL’s monopoly?

The nation’s automobile sector last week witnessed a major reconfiguration with the unveiling of the distributorship of Toyota brands by CFAO Motors.

The development broke the exclusivity of Toyota Nigeria Limited (TNL) as the sole distributor of Toyota brands in the country.

With the unveiling of Toyota by CFAO, made possible by the business alliance between Toyota Tsusho Corporation of Japan and CFAO of France, the CFAO became the second distributor of Toyota brands in Nigeria.

Daily Trust reports that Toyota is one of the most popular vehicle brands in Nigeria in all segments of the market comprising the brand new, tokunbo (fairly used) and the grey import, but the distribution of the brand new Toyota automobiles has been the exclusive market of TNL with many dealers affiliated to it.

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This distributorship has now been expanded with CFAO becoming the second distributor with the possibility of the dealership also expanding.

Experts say the development is good for competition in the market as the consumers would be the ultimate beneficiaries while warning against a price war.

Our correspondent recalled that this was the same fate with Ford vehicles in Nigeria with RT Briscoe being the exclusive distributor for years until Coscharis was appointed following complaints of low sales before the market was taken completely away from RT Briscoe.

This, observers say, is a challenge to TNL to buckle up in terms of increasing its sales figures in order for CFAO, an equally powerful mobility firm with over 100-year history in Nigeria, not to completely take over the market from it.

Providing an insight into the new business segment, the Deputy Managing Director of CFAO, Mr Kunle Jaiyesinmi, in an interview with our correspondent said, “Toyota is a new baby and once a new baby is welcomed into the family, it takes priority.

“For CFAO, we have been around for a long time and we know the Nigerian market like the back of our hand. So we can always adjust.

“The idea now is for us to bring in all the grey importers to clean up their grey and we convert them into regular Toyota family and there are a lot of benefits from that. You have tropicalised vehicles on Nigerian roads.

“CFAO has a new owner which is the Toyota Tsusho of Japan. So the synergy between CFAO and Toyota Tsusho gave birth to this. We are now second distributors and the most important thing is for us to expand Toyota’s presence in Nigeria with the cleaning up of these grey imports.” 

Expert warns against price war

Automobile expert, Dr Oscar Odibo, said the entry of CFAO into Toyota distributorship is good for fostering a competitive market which would be in the interest of consumers.

But he warned against price war or any act of under-cutting, saying that could affect the brand.

“So Toyota distributors and dealers should never make that mistake of making it a price war. If you do price war in the automobile business, especially concerning a particular brand, both the initiator and the partaker in the competition will go down. They will be out of business in no time.

“This is because the tokunbo segment is there. If they are able to cooperate among themselves, they have a united pricing like tailors or DJs. That kind of unity is needed in the Toyota business.

“They need to have a good understanding in terms of pricing. So they should not see it as a signal for price war. They should meet regularly to determine their prices and all,” he said.

Odibo added, “If you look at it at the local level, it is not going to bring about any polarization. It is like having more distributors. When you have more distributors of the same product, there is more competition. Where there is more competition, who gets the benefits? The consumers.

“Remember that competitive marketing and selling of Toyota is multifaceted. You have the brand new, and fairly used. Apart from these two, you also have Grey Import. Grey imports are those Toyota that are not meant for this part of the world. You can have Grey import at both tokunbo and brand new.

Toyota for instance has the American Spec, Dubai Spec, Asian Spec, and the British Spec. Those are the three levels of competition in the selling of Toyota, in this country.

“I know that some 10 years ago, the aim of the industry was to make it one for one, that means if you sell one Tokunbo Toyota, someone should buy one brand new. Income disposability has not allowed that to happen, because the cost of purchase is higher, cost of money is also higher.

“These are the issues that are surrounding the matter. But for me, the main beneficiaries are the buyers. There is more competition among the sellers of brand new Toyota, to sell at good prices. Remember also that Toyota parts are all over the place.

“There are some people who specialize in importing brand new Toyota parts. If you are a distributor and you are looking at expanding your income sources, you will be thinking about the parts, about services. Remember also that almost every mechanic out there can service a Toyota.”