Global supply chain disruptions, new-vehicle availability and preowned vehicle pricing are all only expected to settle at some form of “new normal” in 2023, says Motus CEO Osman Arbee.
Current global supply chain disruptions, which were creating erratic supply of new vehicles and parts, while also stoking high shipping costs, were expected to run into 2023, he noted during the announcement of the company’s financial results for the six months ended December 31.
Vehicle manufacturers only expected new-vehicle stock shortages, owing to a short supply of computer chip and parts, to normalise from July and August this year, added Arbee.
However, “more realistically”, supply problems would probably only be a thing of the past in January next year, he said.
This would allow Motus to again sell consumers “what they want, and not what we have on the floor”.
Artificially high” preowned vehicle pricing would also only start normalising in 2023, he noted.
Where Motus will normally buy a used vehicle at trade price and then sell it at retail price, the company is currently paying retail price, and, in some cases, retail-plus for a used vehicle, and then selling it on at an added margin to the consumer.
This model was set to continue this year as new cars were not expected to be “in abundant supply”, said Arbee, while rental companies were also not expected to “defleet abundantly” this year.
Car rental companies are normally a reliable source of second-hand vehicles, but Covid-19 has led to the deferment of new-vehicle acquisitions on the back of travel and tourism restrictions.
Car rental groups are only now starting to fleet up again following the global spread of the Omicron variant in November and December, which means they are unlikely to defleet this year.
Consumers were also holding on to their vehicles for longer periods, which was restricting supply to the preowned market, said Arbee.
Motus saw revenue increase by 1%, to R44.8-billion, for the six months under review, compared with the similar six-month period in 2020.
Operating profit jumped by 23%, to R2.15-billion.
With continued healthy growth in market share, Motus now sells one in five new vehicles in South Africa, said Arbee.
The controllable market share of the group’s imported brands –Renault, Kia, Mitsubishi and Hyundai –grew to 19.2% in December 2021, up from 16% at the end of December 2020.
‘Controllable’ refers to the car, bakkie and van markets, and not the truck markets, where Motus does not yet compete in South Africa.