Strong used-car, aftermarket sales see Motus bounce back 

24th February 2021 By: Irma Venter - Creamer Media Senior Deputy Editor

Strong used-car, aftermarket sales see Motus bounce back 

A buoyant used-car market and strong aftermarket parts sales have helped mobility group Motus bounce back from the significant decline the group experienced owing to the Covid-19 pandemic in the last half of the previous financial year.

Reporting on the company’s results for the first six months of the new financial year, ended December 30, CEO Osman Arbee said on Wednesday that the group saw a 6% improvement in revenue, to R44.34-billion, compared with the same, Covid-19-free six months in 2019.

Operating profit was down 6%, to R1.72-billion, owing largely to reduced car rental income and lower margins attributable to a strong move by cash-strapped consumers to the pre-owned and entry-level vehicle segments of the market, as well as a shift to more affordable parts in the aftermarket parts business.

Arbee said Motus sold about 80 000 vehicles during the period, at a ratio of roughly one new vehicle to one used vehicle.

The normal ratio is one new vehicle to 0.6 used vehicles.

Motus was able to feed its used-vehicle supply chain with stock from its rental fleet, which was depleted from 21 000 units to the current 14 000 units.

Arbee said Motus’ rental business was now 50% smaller than pre-Covid-19, but added that it could easily scale up to 70% should the tourism market improve.

Motus is also spending the current period digitising its vehicle rental space, in a process that would take around 24 months.

“We are pleased with the robust performance our diversified offering continues to provide, effectively buffering the group against the impact of the declining trading conditions in the economy,” said Arbee.

“In the period under review, we continued to act swiftly and decisively to preserve cash and adapt our business to the new operating realities and elevated levels of uncertainty.”

The Import and Distribution business saw a 2% drop in operating profit, to R421-million.

The Retail and Rental business experienced an 8% drop in operating profit, to R740-million.

Financial Services saw a 3% decline in operating profit, to R467-million.

Aftermarket Parts increased operating profit by 8%, to R266-million.

Commenting on the changes about to be implemented in the local automotive industry in how South Africans would buy, repair or service a car, Arbee said that these changes would only affect 2.5-million vehicles out of a national car parc of 12.5-million vehicles.

The changes, which come into effect on July 1, are the result of a series of guidelines published by the Competition Commission last year.

Dealers will, for example, not be able to include a maintenance or service plan in the purchase price of a vehicle, which means that the consumer can say yes or no to buying a plan from a dealership. 

The intention is also to allow non-original spare parts and independent service providers to service in-warranty vehicles without automatically voiding the warranty.

One of the aims of the guidelines is to increase the participation of historically disadvantaged people in the automotive industry.

Arbee said the guidelines would produce some short-term challenges, but noted that it would also provide some “fantastic opportunities” to be exploited over the long term.

He said Motus had vast experience in both the servicing of vehicles and the procurement of vehicle manufacturer parts through its dealerships, as well as in the procurement and distribution of non-vehicle manufacturer parts through its Aftermarket business.