While group revenue at Combined Motor Holdings (CMH) remained unchanged at R10.7-billion for the year ended February 28, compared with the previous 12 months, operating profit increased from R317-million to R326-million.
Within the group’s motor retail business, CMH new-vehicle sales declined 0.6%, seen against a 2.6% decline in the national dealer market in the brands that the group represented.
“Encouragingly, sales during the last quarter were up 11%,” notes CEO Jebb McIntosh.
Despite expectations of an increase in used- vehicle sales for the year ended February 28, as a result of new-vehicle price increases, both national and group unit volumes declined 5.9%.
However, used-vehicle sales improved 4.4% during the last quarter.
CMH expects this trend to continue as the depreciating rand places pricing strain on new- vehicle manufacturers, with the used-car market expected to grow 5% in 2015.
The JSE-listed group has opened four new Mazda and six new Datsun operations on premises already established as Ford and Nissan dealerships respectively, says McIntosh.
A further Mazda, two Mitsubishi, and an Iveco branch will be opened during the first quarter of the new financial year.
McIntosh says sales of MG and Maxus vehicles, which are manufactured in China, did not meet expectations during the year under review.
“The brands are not viable at the current exchange rate.”
However, CMH will continue to sell the Chinese imports, notes McIntosh.
CMH’s car hire division saw a 3.5% increase in rental days sold, coupled with a 1.8% improvement in average daily rental rates.
This CMH division recently announced the launch of a van and truck rental division which will be leveraged off the existing infrastructure.
In addition, under the brand name ‘Restart’, it will market the hire of older vehicles, typically to fill temporary gaps in corporate fleets, for periods averaging 90 days.
During the year under review, CMH continues executing its decision to close its marine and leisure division.
“Market surveys indicate that, following years of decline in consumers’ disposable income, expenditure in this area has been steadily eroded,” says McIntosh.
“The emerging black middle and upper-level income groups have shown little interest in this form of leisure activity.
“This appears to be a little bit of a sunset industry.”
McIntosh expects the year ahead to be hampered by power outages and labour unrest.
“A lack of strategic planning over an extended period, particularly with regard to maintenance of Eskom’s ageing infrastructure, has manifested in rolling blackouts which are hugely disruptive to the economy.
“There appears to have been a breakdown in Eskom’s lines of authority and responsibility at leadership level, and this does not bode well for a speedy solution. Within the group, an investment in alternative energy sources for over 100 dealerships and car hire depots is prohibitively expensive and impractical.”