Automotive group Motus will reduce its vehicle rental fleet by 40% and close 20 sites within its rental business, says CEO Osman Arbee.
Motus operates the Europcar and Tempest vehicle hire brands, operating through 100 car rental outlets in South Africa and 17 outlets in neighbouring countries.
The group has also begun an early retirement and retrenchment process to cut the workforce in its vehicle rental business by between 50% and 60%, says Arbee.
He says the group has already defleeted 7 000 vehicles from its rental fleet as this market continues “to hurt” from the spread of Covid-19.
These vehicles are sold as used cars through Motus’s 70 Auto Pedigree dealerships.
Arbee says this is necessary as “people are not flying”, with some sense of normality only expected to return in January or February next year “at the earliest”.
The only customers the rental industry currently has are some businesspeople and insurance companies requiring replacement vehicles for their customers.
“There are no planes, no flying, no tourists,” says Arbee.
The norm for Motus is to have a rental fleet of between 20 000 and 22 000 cars, with the “new norm” a fleet of between 13 000 and 14 000 vehicles, he adds.
He expects to reach this new norm by August.
As to whether this defleeting will not artificially buoy the used-car market, Arbee believes that it will do so for no longer than six months.
Overall, Motus will rationalise its workforce by about 2 000 people, or 10%, at a cost of between R120-million and R140-million, with the bulk in the vehicle rental space.
On the vehicle import side, Motus has sufficient forward cover and stock not to immediately increase new-vehicle prices in line with the fluctuating rand, but will ease in an expected 9% to 10% jump over the next six months, says Arbee.
Motus imports the Hyundai, Kia, Renault and Mitsubishi brands.
Motus expects a 5% to 15% drop in revenue for the financial year ending June 30, compared with the previous year, as well as a 35% to 50% drop in operating profit.
Motus has about 50 employees who tested positive for Covid-19, with the bulk of this number in South Africa. One employee has passed away from the disease.