Good year, solid prospects for Motus

JSE-listed automotive business, Motus, is bullish about the motor industry’s prospects.

Motus CEO

Osman Arbee, the CEO of Motus, says there is still a lot of activity despite consumers being under financial pressure because vehicle supplies are starting to normalise.

Arbee added that Toyota did not produce any passenger or light commercial vehicles at its plant in Prospecton in Durban for several months because of the significant flood damage to the plant.

He says new vehicles produced at Toyota’s plant will only reach the market in October this year, and he anticipates that other vehicle stock, which has been dented by semiconductor shortages and other issues, will normalise by January next year.

“By mid-2023, we think we will have a lot more stock, so we are very bullish about that,” he says.

Arbee also believes that the car rental industry will increasingly assist the new vehicle market.

“They have been short buying in the past three years. We think they will give the industry a kicker of about 20 000 extra cars next year,” he says.

Motus is forecasting new vehicles sales of between 500 000 and 520 000 units for this calendar year and between 530 000 and 550 000 in 2023.

Arbee says consumer and business sentiment will remain under pressure over the short to medium term but stressed that the strength of the Motus group lies in its integrated business model, diversification and scale.

He says Motus sold a total of 135 564 new vehicles in its financial year to end-June, which includes sales by its operations in the UK and Australia.

Motus increased its sales in South Africa by 21% to 104 638 units in the year to end-June from 86 304 in the previous year.

The total number of new vehicles retailed in South Africa increased by 10% in the year to end-June to 490 124 vehicles.

This means Motus increased its domestic market share to 22.4% from 20.2%, he says.

However, Arbee says total sales of pre-owned vehicles by the group declined by 17% in the year to 89 753 units from 108 700 units because of a shortage of quality pre-owned vehicle stock.

Motus last week reported a 5% rise in revenue to R91.9 billion in the year to end-June 2022 while operating profit increased by 31% to R5.03 billion.

Profit before tax rose by 56% year-on-year to R4.47 billion.

Headline earnings per share grew by 72% to 2 025 cents.

Arbee says Motus will focus on growing its aftermarket parts business in the next two years.

He says the group believes aftermarket parts “have got a lot of road to run in selling lots more parts to the industry” despite all the forecasts about the adoption of new energy vehicles (NEVs).

Arbee says they plan to do bolt-on acquisitions where they can in South Africa, the UK and Australia, particularly as the group does not believe this is an area that depends on new cars or on what the original equipment manufacturers (OEMs) want and it is also very cash generative.

He believes electric vehicles “are coming but very slowly” and it will take time for them to be adopted by consumers.

This is because the price of EVs is high and the “bread and butter” in the South African new vehicle market is below R750 000.

“It could take another 15 years before we start normalising,” he says.

Arbee says South Africa has 12 million internal combustion engine (ICE) cars, and Motus plans to exploit ICE vehicles because there are enough of them for the group to sell parts to in the country.

More Industry News stories

BAIC SA wins prestigious award in China

BAIC SA wins prestigious award in China

BAIC South Africa has won the prestigious Excellent Retail Award at the Chinese manufacturer’s 2024 BAIC global distributor business event.

  • 17 May 2024
Building blocks for new manufacturing plant in place

Building blocks for new manufacturing plant in place

The final building blocks for the establishment of South Africa’s latest automotive manufacturing site have been laid, paving the way for construction to begin shortly at the Coega Special Economic Zone (SEZ) in Gqeberha, Nelson Mandela Bay in the Eastern Cape.

  • 17 May 2024