Zeda, which owns Avis and Budget brands, plans to roll out more products in the new financial year to diversify its revenue base away from traditional tourism-related activities.
“Our strategy remains intact as the integrated mobility provider. The key for us is the continuous innovation to diversify our portfolio,” CEO Ramasela Ganda said in an interview.
“We will be launching different products that really have their foundations on mobility and subscription being the key driver. What subscription does for us is offer flexibility to buy ‘as I need it’ or ‘pay as I need it’.”
While cyclical business and leisure tourism has come back from the depths of the Covid-pandemic, Zeda under Ganda has been recalibrating its strategy to be a service provider of choice in the car market for retail and corporate clients.
In October, Avis Fleet entered the flexible car rental market with the launch of iLease, which gives consumers the option of using a vehicle for any duration between 12 and 48 months.
While vehicle leasing and rentals have been around for decades, iLease offers flexible leases or rental terms as opposed to fixed ones. The iLease solution also aims to spare consumers the hassles of owning and maintaining the vehicles, especially in a higher interest environment.
“iLease is really revolutionising what mobility is about. It gives you flexibility that works not only with your mobility requirements but also with your economic conditions, which do change from time to time,” Ganda said.
Zeda grew its business over the past year despite the tough domestic economy, characterised by high inflation, elevated interest rates and a weaker used-car market.
This was Zeda’s first-yet annual results as a listed entity since Barloworld unbundled its business housing the car rental brands.
The group’s two main operating segments are car rental and leasing. Avis and Budget fall under the car rental segment, while leasing includes Avis Fleet, which buys vehicles from various manufacturers that are contracted to customers, such as businesses and government departments, for at least a year.
The car rental segment was Zeda’s biggest money spinner, generating 52.1% of profit, and the rest coming from leasing vehicles.
Revenue rose 12.4% to R9.1bn, operating profit 22.8% to R1.6bn and the operating profit margin one percentage point to 17%.
Profit jumped 30.2% to R742.1m and headline earnings per share (Heps), a common profit measure in SA that excludes certain items, 17.3% to 381c.
Over the past year, Zeda also reduced its electricity consumption by 18%, grew its hybrid vehicles fleet 16% and delivered its first batch of EV trucks to customers.
More people defaulting on their loans and fewer consumers taking out car loans because of higher interest rates resulted in more used cars available on the market.
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