Motus, which runs one of SA's biggest car dealerships, said on Tuesday it expects its first-half profit to jump by as much as 55%, boosted by disproportionate demand for pre-owned vehicle as worldwide chip shortages dog the production of new vehicles.
Led by CEO Osman Arbee, Motus and sells new and pre-owned cars through its more 300 network of car dealerships in SA, which took a knock in the initial stages of the first hard lockdown that resulted in the drop-off in in vehicle sales before they subsequently recovered.
"A combination good cost control and excellent inventory and balance sheet management has seen the business not only surviving but thriving during the pandemic," Kagiso Asset Management portfolio manager Abdul Davids said.
With the gradual easing of lockdown restrictions, Motus benefited from its integrated model, which gives potential customers flexibility to buy affordable vehicles as well as providing outlets for replacements car parts in the growing market for second hand vehicles.
Motus, which was spun out of Imperial Holdings and separately listed in 2018, is poised to benefit from its business model
hard-pressed consumers are more likely to default to second-hand vehicles rather than buying new ones because rising inflation is likely to prompt the Reserve Bank to hike interest rates in the coming quarters.
The Bank is already widely expected to raise rates for the second time since November when its monetary policy committee ends its scheduled meeting on Thursday.
Still, Motus — which imports brands such as Hyundai, Kia and Renault — expects new vehicle sales recover despite the global supply-chain bottlenecks, which it estimates will clear later in 2022. It projects new vehicle sales to be 470,000-490,000 units in 12 months to June, which marks the end of its financial year, compared to 445,319 vehicles a year before.
“Our four importer brands and the 21 non-owned brands are fortunate in that they have an extensive model range which enables them to focus on available stock,” Motus said in a statement.
“While there are shortages of certain derivatives at different times, we are still able to offer the customer a wide selection of brands and models.”
The collapse in business and leisure travel slammed its car rental business, prompting the reduction in the vehicle rental fleet, which resulted in costs savings. The company said the capacity utilisation rate, or the extent to which its cars are out with clients, in the car rental market currently was more than 70%.
Motus also has an aftermarket business that sells car parts to the vehicles that fall outside warranty through service providers such as Midas.
Motus said said headline earnings per share are likely to rise 45%-55% in the six months to end-December from the same period a year earlier.
Its shares were up 3.56% to trade at R113.73 in early afternoon trade on the JSE, giving it a market valuation of R21.3bn.
Update, January 25 2022
The article has been updated with more information and analysts’ comment.
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