Mixed bag for Super Group in first six months

Peter Mountford, the CEO of Super Group, says the group’s South African dealership business performed well in a very challenging trading environment during this period, in which total dealer vehicle sales reported by automotive business council, naamsa, declined by 3.7% in 2024.

Mountford says the entry of numerous new Chinese-manufactured vehicle brands negatively affected the market share of several traditional brands and impacted later model pre-owned and demonstration vehicle sales as well as gross margins.

However, Mountford says the group is increasingly well represented within these new product ranges and now has one Chery, three Haval, Jetour and GWM dealerships, and four Foton dealerships.

Aftermarket activity levels remain resilient, he adds.

In what may be an indication of the impact of any vehicle emission standards in South Africa, Super Group says its UK dealership business delivered poor results.

Mountford says this was driven largely by a decline in Ford’s new vehicle sales and market share, and the negative effect of the Vehicle Emissions Testing and Standards (VETS) legislation on the supply of and margins on combustible fuel vehicles.

VETS is the UK legislation that mandates original equipment manufacturers (OEMs) to ensure 22% of their new car sales are plug-in battery vehicles to avoid significant financial penalties for exceeding the allowed supply of combustion engine vehicles.

Mountford says Ford remains under significant pressure in the UK, with its overall passenger market share declining to 5.8% from a historically market-leading position.

He says the UK’s average passenger car parc age increased to 10.6 years owing to restricted combustible fuel vehicle availability and significant customer concerns regarding electric vehicle efficiencies, range, operational reliability and residual values.

Mountford adds that profitability was extremely poor in both the Hyundai and Kia dealerships.

“It is our expectation that with an increase in the VETS threshold for 2025 to 28%, the current position will persist, and the group will, as a result, look to rationalise and consolidate its dealership footprint in the UK.

“This will include a review of cost structures and investment plans to ensure that the business is correctly positioned to deal with what is effectively a significant structural change in the UK dealership business and car market.

“UK passenger manufacturing volumes for calendar 2024 of 799,584 are more than 50% down on average annual production levels over the past 20 years,” he says.

The revenue contribution of the dealership division to total group revenue declined marginally to 53.2% in the six months to end-December from 54.5% in the prior period.

However, the dealership division’s contribution to total group operating profit took a significant knock, dropping to 19% from 25.4%.

This contributed to Super Group’s group revenue decreasing by 7.6% to R23.67 billion in the six months to end-December and operating profit dropping by 13% to R959.8 million.

Headline earnings per share slumped by 24.2% to 104.8 cents from 138.3 cents.

Turning to the group’s prospects, Mountford says the South African dealership operations are expected to continue outperforming the local market while the benefits of rationalising the dealership operations and cost structures across the UK should contribute to a better second-half earnings outcome from this cluster.