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CMH says new car prices may increase up to 11%, e-toll billing 'unworkable'

23rd April 2014

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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New car prices should, on average, increase between 8% and 11% this year, compared with 3% last year, predicted Combined Motor Holdings (CMH) group CEO Jebb McIntosh on Wednesday.

He said in Johannesburg that some some importers had already upped the price tags on their cars by 14% since January.

McIntosh said importers were most likely protecting themselves against the weak rand, which had dropped sharply against the major currencies over the last year, increasing the price of imported goods.

Apart from these price increases, possible interest rate hikes of 2% over the next 18 months could also serve to ensure a flat new car market in 2014 over last year.

The buying trend, starting in 2011, remained towards more affordable cars, with the luxury market “holding up remarkably well”, said McIntosh.

Finance approval rates within CMH had stabilised at around 40%, he added.

CMH sold 19 945 new vehicles through its retail network in the 2014 financial year, ended February 28, compared with 19 793 in the 2013 financial year.

McIntosh said CMH opened six new dealerships, including two for Nissan and one for Mahindra, and closed seven, including Peugeot and Citroën.

CMH sold 13 970 used vehicles in the 2014 financial year, compared with 13 472 units in the 2013 financial year. This increase of 4% came despite a roughly 5% decline in used car sales in South Africa, said McIntosh.

Less positive was the news on the MG passenger car and Maxus  commercial brands, distributed by CMH in South Africa, and owned by SAIC Motor in China.

McIntosh said CMH had been disappointed with the brands’ performance in the local market.

New models, promised for 2013, had not yet been delivered, he noted.

CMH also required price competitive models to achieve brand recognition in South Africa. However, a deal with the UK, where the MG brand had originated, ensured all right-hand-drive models would be launched there first, and at standards this country required, which had delayed model introduction, while also increasing costs.

“There is no point hitting our head against the wall, we need good pricing,” said McIntosh. “Management is assessing its options regarding the future of this venture, particularly in light of the recent currency deterioration.”

However, he emphasised that no decision had been taken yet on the future of the MG or Maxus brands within CMH.

McIntosh said the group remained keen on importing vehicles from the East, but that it would most likely be commercial vehicles in future, and not passenger cars.

Looking ahead, he said CMH was considering one or two acquisitions, while the group also looked forward to adding Datsun and Mazda to its brand portfolio.

CMH also planned to extend its service product range, through the addition of tyres, for example.

The nearly 40-year-old CMH on Wednesday for the first time reported revenue exceeding R10-billion, at R10.8-billion, for the financial year ended February 28, up from R9.8-billion in the previous financial year.

Operating profit reached R320-million, up from R289.8-million.

TOLL-ROAD BILLING ‘UNWORKABLE’
The CMH financial statement issued on Wednesday sharply criticised the Gauteng etoll billing system.

“The ill-conceived billing system designed for the Gauteng toll roads is proving to be unworkable in a dealership environment,” it noted.

“Accounts are received for vehicles long since sold and for usage prior to the dealerships trading in used vehicles.

“This occurs, in part, because the toll system is linked to an already-flawed Electronic National Administration Traffic Information System (eNaTIS) containing inaccurate vehicle ownership information.

“Attempts to have invoices redirected to correct owners are met with no response from an obviously overloaded South African National Roads Agency billings department”.

CMH expressed the hope that “the inefficiencies highlighted since the opening of these toll roads would prompt a rethink by the appropriate authorities”.

 

Edited by Creamer Media Reporter

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