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‘Asian brothers’ coming to SA 'with a force', says Motus boss

Image of Motus CEO Osman Arbee

Osman Arbee

27th February 2024

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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Motus’ stable of imported vehicle brands – Hyundai, Kia, Renault and Mitsubishi – all experienced a tough six months towards the end of last year.

Speaking at the company’s financial results announcement on Tuesday, the CEO of the parts and vehicle importer and retailer, Osman Arbee, said these brands’ combined share of the domestic passenger car market dropped from 22% at the end of 2022, to 19.4% at the end of last year.

He said this came on the back of the continued buying-down trend in the market, with cash-strapped South African consumers opting for cheaper cars in the face of increasing vehicle prices and rising living costs.

The problem, however, was that Hyundai and Kia no longer had certain popular entry-level vehicles available, as the South Korean brands had stopped production of the Hyundai Atos and Kia Rio.

The new-car market was also becoming increasingly competitive, with more affordable brands such as Suzuki and a myriad of new Chinese entrants securing a growing following.

“The Asian brothers are coming in with a force,” said Arbee, “and they don’t like distributors like me. So the Havals are going to come in, the Cherys are going to come in, the Suzukis, the BYDs…but they are coming in themselves, not through an importer.

“So, I’ll have a few dealerships, but that is not where we make the real money. That challenge is coming.”

CFO Ockert Janse van Rensburg noted that Motus’ import and distribution business had seen revenue for the six months ended December 31 drop by 21%, to R10-billion, compared with the same six months in 2022.

Operating profit declined by 45%, to R377-million.

When including Motus’ vehicle retail business, which encompasses dealership sales from various brands, the company saw a 10% drop in new-vehicle sales in South Africa in the six months ended December 31, to 46 185 units, compared with the same period in 2022.

The UK and Australian markets, however, offered better numbers, with a 19% and 31% increase in sales, respectively.

Arbee lauded the diversification of the Motus business model, which allowed the group to prosper in other regions and business streams when one region or stream faltered.

The aftermarket parts business performed particularly well in the period under review, for example, with revenue up 33%, to R7.1-billion, and operating profit up 49%, to R605-million.

Arbee noted that the parts business, as well as car rentals, truck sales and workshop services, were all able to counter declining new-car sales in South Africa.

He said the target was for Motus to earn 50% of its earnings before interest, taxes, depreciation and amortisation outside South Africa in the next two to three years.

This currently stands at 34%.

Motus on Tuesday reported an 11% increase in revenue, to R57.1-billion, and a 1% increase in operating profit, to R2.6-billion.

 

Edited by Creamer Media Reporter

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