Motus Toyota CapeGate was chosen for the final servicing destination of a very special Hilux-bakkie that had just completed 48 018 kilometres of non-stop driving.
- Dealer News
- 20 January 2021
A total of 38 Barloworld Automotive motor franchise dealerships in South Africa and Botswana are part of the discussions between the JSE-listed group and its equal joint venture partner NMI Durban South Motors about the proposed disposal of these dealerships as a going concern.
The dealerships represent leading global brands such as Audi, BMW, Ford, Toyota, Lexus, Isuzu, Mazda, Volkswagen and Mercedes-Benz.
“These discussions are gaining momentum and, subject to board approval, are expected to be concluded in the next few months, after which a detailed terms announcement will be published,” said Barloworld in December 2020.
This follows Barloworld previously confirming the assessment of the long-term fundamentals of its businesses as a focus area in its ongoing portfolio review, including the review of the dealership portfolio.
Barloworld also previously confirmed that options concerning the optimal deployment of capital in motor retail remain under due consideration. It has also confirmed it is reviewing expressions of interest for the logistics division to evaluate its future options regarding this business.
These assets will possibly be disposed of despite Barloworld stating in its latest integrated report that automotive (car rental, motor retail, fleet services, used vehicles and disposal solutions), and logistics (transport management and supply chain optimisation) are the core divisions of the group together with equipment (earthmoving equipment and power systems) and consumer industries (Ingrain – starch and glucose).
Barloworld further states in its latest integrated report that it is seeking a more balanced portfolio to generate long-term value, which has prompted the acquisition of Tongaat Hulett Starch (renamed Ingrain) in South Africa to access the less cyclical consumer sector.
The burning issue with Barloworld Automotive is that the division’s return on invested capital (ROIC) declined to 2.9% in the year to end-September 2020 from 13.2% in the previous year compared to its stated goal of achieving above-market growth and ROIC greater than 13% with positive economic profits.
However, Barloworld is strangely reluctant to state in clear and unambiguous terms what its plans are for its automotive division, referring to the comments of Barloworld CEO Dominic Sewela at the group’s recent financial results presentation.
Sewela said during that presentation that the acquisition of Tongaat Hulett Starch and the expansion of its Russian equipment business with the acquisition of Wagner Asia Equipment in Mongolia anchor the group clearly in terms of industrial capital distribution goods and related services and also anchor the group very clearly in terms of the food and ingredient businesses.
“So, these are going to be the core in terms of business verticals for Barloworld in the medium to long term as we manage the pivoting out of the motor, automotive and logistics businesses,” he said.
Barloworld was also guarded in its response to a request for comment on what the group’s plans are for Avis Rent A Car and Avis Fleet if the proposed disposal of the motor trading business is finalised.
“With the car rental industry expected to remain under pressure for quite some time, the review of our automotive portfolio is ongoing amid the changing environment.
“The review has resulted in car rental and Avis Fleet being integrated into a single unit to ensure the realisation of benefits of scale between these two businesses and also to address gaps in the product portfolio driven through a single focused management team,” the group said.
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