Automotive group Motus, which will list on the JSE on Thursday next week, is mulling “selective” acquisitions outside SA, says acting CEO Ockert Janse van Rensburg.
The company, which has been unbundled from logistics and automotive conglomerate Imperial Holdings , generates 87% of its operating profit from SA and is considering further expansions to diversify its earnings.
The company’s recent smaller acquisitions include the Hyundai dealership in Sandton and the Mercedes dealership in Rustenburg. Janse van Rensburg said Motus, the exclusive South African importer of Hyundai, Kia, Renault, Mitsubishi vehicles, would continue making smaller acquisitions in SA if opportunities arose.
Larger and stand-alone acquisitions would be internationally focused and selective, he said. “We have recently bought additional businesses in the UK and Australia. That was really to extend our service offering there,” he said.
In 2017, the company acquired UK automotive dealer Pentagon Motor Holdings, which operates passenger and light commercial vehicle franchises in the UK. It also acquired 75% of Australian-based SWT Group, which operates dealerships in that country.
Janse van Rensburg said the Australian market was experiencing consolidation. “It is a fragmented market,” he said.
The company had already established a base in Sydney and Melbourne with more than 30 dealerships. “If we increase the number of dealerships to 50, we could probably become a significant player in that country,” Janse van Rensburg said.
Motus is structured into four business segments – import and distribution, retail and rental, motor-related financial services and aftermarket parts.
Motus’ financial services business, which has an operating profit of R889m, sells service, maintenance and warranty plans. It also develops and sells value added products and services and has profit share arrangements and joint ventures with insurers and banks.
The import and distribution segment has an operating profit of R788m. The retail and rental and aftermarket parts segments have an operating profit of R1.6bn and R447m.
Janse van Rensburg said the import business had matured, with limited prospects of substantial expansion. “At 15% market share, it is really about profitability and leveraging existing capabilities through the automotive value chain,” he said.
Motus’ growth aspirations for the retail business, which accounts for R1.6bn of operating profit, were higher, largely thanks to international acquisitions. Motus operates through an integrated value chain and has the ability to replicate other elements of its business, which give rise to annuity income streams, through the initial retail footprint.
He said the company expected steady growth from the financial services. “Our aspiration there is that it should be much larger than the importer segment,” Janse van Rensburg.
Ahead of its listing , Motus has completed domestic and international road shows.
He said Motus gave investors an opportunity to invest in a business that plays in the full spectrum of the automotive value chain except for manufacturing. “There are not many of those opportunities where you can get the full integrated model to invest into. Normally those investors will have to separately invest in dealerships, importers or in parts,” he said.