Automotive group Motus will increase its spending on alternative power sources over the next few years as load-shedding and problems at state-owned power utility Eskom persist.
“We don’t see light at the end of this tunnel quickly,” CEO Osman Arbee said on Tuesday when the group presented its half-year results to end-December.
The company, valued at R21.37bn on the JSE, expects to fork out about R250m over the next 18 months on top of the R100m it has spent already on solar and other energy sources.
“We can’t continue investing in generators. They’re expensive, they’re inefficient and they’re not friendly,” he added.
But the plan is not to go off the grid completely as this would be too expensive and the company can manage with batteries and generators, Arbee said in an interview with Business Day.
“I need a lot of electricity between 8am and 5pm, so I don’t need it for 24 hours. I’m not a factory that has to produce things, and in the shops a small inverter or a small generator solves the problem,” he said.
Motus sells new and pre-owned cars through its network of more than 300 dealerships in SA. Operating in SA, the UK and Australia, it provides automotive mobility solutions and vehicle products and services via its four segments, including import and distribution, retail and rental, and aftermarket parts.
Most of the investment will go to the bigger dealerships, with investments in solar and more batteries to keep the lights on.
Eskom’s leadership said on Monday it does not anticipate load-shedding will go beyond stage 6 and it has a contingency plan if load-shedding gets as severe as stage 8.
According to data from the load-shedding notification app EskomSePush, SA experienced 207 days of power cuts in 2022 and every day so far in 2023.
Motus increased its dividend by nearly one-10th as it reported higher revenue, operating profit and profit in its interim results despite shortages of some vehicle models over the past 18 months.
The company increased its dividend 9% year on year to 300c as its revenue rose 14% year on year to R51.22bn. Operating profit was up 22% to R2.62bn and profit up 10% to R1.55bn in its half-year results to end-December.
Local consumers are clearly willing to spend on vehicles. According to industry data from Naamsa, 275,521 vehicles were sold in the six months to end-December, up 16.3% year on year.
In October, the group acquired aftermarket parts business Motor Parts Direct for R3.7bn to reduce its dependence on vehicle sales amid an international shortage of semiconductor chips.
The family-owned UK-based Motor Parts Direct is a business-to-business parts distributor that focuses on supplying primarily to the passenger and light commercial vehicle sector and to workshops in and around the UK.
“You can’t have all your eggs in the SA basket. Not because we don’t like SA. It’s that we can’t do much. No, the OEM [original equipment manufacturer] blocks me. The Competition Commission blocks, so we’ve got to look for bigger acquisitions outside,” Arbee said in his presentation.
In November, the group bought three Mercedes-Benz passenger dealerships and one commercial vehicle dealership for R715m. The new acquisitions boosted revenue but cut free cash flow by 85.3% to R425m.
In SA, where Motus generates three-quarters of its operating profit, vehicle sales continued to recover because of the improved availability of vehicles, consumer resilience and the willingness of consumers and businesses to invest despite load-shedding, corruption, poor educational and skills development, insufficient infrastructure investment and rising unemployment all hampering domestic economic growth.
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