Motus, which was listed on the JSE in 2018 after it was unbundled from Imperial, is counting on the accelerating Covid-19 vaccination drive to power its strategy to target the car rental market as one of the key levers of growth.
The car rental market was hit hard by the fallout from the Covid-19 pandemic as air travel dried up amid a hard lockdown that prohibited movement between provinces and closed international borders. While SA opened some of its borders late in 2020, the country’s tourism industry got a vicious blow from the discovery of the Beta variant, after which travel from SA was banned by many countries.
But Motus CEO Osman Arbee said he was confident that the segment will recover alongside tourism in the next 12 months.
“The car rental business offers us a great opportunity once it recovers; it will definitely give us a kicker, along with other businesses within our portfolio,” he said.
Motus, which competes with players such as Combined Motor Holdings and Bidvest, sold nearly 170,000 cars in SA in the year to end-June, equally split between new and pre-owned cars.
Car sales suggested a pick-up in the broader economy, and there were signs too of pent-up demand after the company’s network of dealerships was closed for weeks in the first half of 2020. The group’s integrated operating model supported its performance by cushioning it against cyclical downturns, with consumers leaning towards buying pre-owned cars in tough economic times.
Apart from importing and selling new and pre-owned cars through its network of car dealerships, Motus has an aftermarket business that sells car parts to the vehicles that fall outside warranty through service providers such as Midas.
Motus said headline earnings per share, a key measure of profitability that strips out one-off items, rose 300% to R11.79, compared with the same period a year ago when the first hard lockdown resulted in dealership closures.
To manage the fallout, Motus cut back on expenditure such as advertising and salaries.
“The group successfully implemented various action plans and initiatives focused on converting excess vehicle inventory and vehicle rental fleet into cash,” the company said.
The new vehicle market in SA is still subdued, Motus said, though it is showing steady signs of recovery. According to industry body the Automotive Business Council’s figures, 445,319 units were sold in the 12 months to June. Motus said it had a 20.2% share of the retail market, which was similar to the previous year’s.
In the UK, where it has operations, Motus said the new vehicle market rose 14.6%. The passenger market jumped 11.3%, the light commercial vehicle market rose 33.9% and heavy commercial vehicles increased 13.7%. In Australia, Motus said domestic car sales benefited from restrictions in international travel.
The share price closed 2.9% higher at R91.05 in late trade on the JSE.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.