Good times come and good times go

The listed Motus group has said that it may have to close some of its dealerships.

Motus Group

The international group, active in the UK and Australia, as well as South Africa, has started scaling back its car rental operations, while its workforce will be slashed by at least half.

Shortly before the end of its financial year, Motus said in a statement that because of the lockdown, all its dealerships in South Africa closed on 27 March. Most were able to reopen on 12 May after restrictions were lifted, while its UK showrooms only re-opened on 1 June. Although its Australian businesses remained open throughout the period, sales and servicing of cars were greatly reduced.

The entire South African motor industry was able to resume full operations in June 2020 under the Level-3 lockdown restrictions. Although markedly improved from the previous two months, the new-vehicle market continued to remain under severe pressure. The June 2020 new-vehicle sales still reflect a substantial decline of 14 086 units or 30.7% from the 45 953 vehicles sold in June last year compared to the aggregate domestic sales of 31 867 units in June 2020.

According to Naamsa, out of the total reported industry sales in June, an estimated 29 100 units or 91.3% represented dealer sales, 4.6% sales to government, 3.7% to industry corporate fleets, and an estimated 0.4% represented sales to the vehicle rental industry.

In June 2020, the new passenger car market had registered a substantial decline of 9 667 cars or a fall of 33.4% to 19 264 units compared to the 28 931 new cars sold in June last year. With the tourism sector still under lockdown, there was virtually no contribution by the car rental industry to support the market as is normally the case this time of the year.

Motus experienced a slight recovery in its aftermarket parts business owing to pent-up demand. The group was able to grow its share of the local market, particularly for imported brands, however, owing to the decline in the total new-vehicle market, Motus said it was considering rationalising its dealership footprint.

Its vehicle rental business is being severely impacted by the lockdown. To right-size the business, which includes Europcar and Tempest, it reduced the rental fleet by 40% and commenced with an early retirement and retrenchment process under section 189 of the Labour Relations Act. It said the workforce would be reduced by 50%-60% as it closed 20 branches.

As reported by online publication, InceConnect, the group expects revenue for the first half of the year to be between 5% and 15% lower than last year, with operating profit declining by 35%-50%. Earnings per share (EPS) are likely to be as much as 90% lower, including R450 to R550 million of one-off items incurred because of the current economic crisis caused by COVID-19, including retrenchment costs and impairments. Normalised headline EPS will be 60%-70% lower.

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