New car sales outlook is bleak, warns Motus
The automotive group says there is a risk that new car sales in SA will fall in the next two to three years
Automotive group Motus, which imports and sells cars, warned on Wednesday it was cautious about its outlook for the medium term, as depressed consumer confidence in SA and the coronavirus outbreak threaten new vehicle sales.
Both new car sales and industry margins in SA could fall in the next two to three years, the group said, as consumers continue to delay purchases, trade down to cheaper vehicle models and place pressure on the quality of the pre-owned vehicle supply.
Motus, which was unbundled from Imperial Holdings and listed on the JSE in November 2018, is a distributor and retailer of accessories and aftermarket parts for out-of-warranty vehicles.
The group warned that changes to legislation, load-shedding, high unemployment and the prospect of credit-rating downgrades were all weighing on the country’s car market. SA-specific problems looked set to stay for at least two to three years.
The company kept its interim dividend to end-December unchanged at 240c, with profit before tax little changed at R1.24bn.
Group revenue rose 7% to R41.95bn, with the company reporting that although the new vehicle market declined by about 2% during the period in SA, it had managed to grow market share about 0.8 percentage points to 20.1%. This was largely due to increased sales volumes for entry-level vehicles.
The company said an increase in selling prices and higher revenue from rendering of services boosted revenue.
The company, led by CEO Osman Arbee, warned that although it was committed to delivering stable operating results, the global environment as a whole remained challenging. It cited the risk of the coronavirus outbreak as another challenge.
“The global automotive sector is going through a period of unprecedented change, with declining volumes, new technologies and business models, demanding consumer expectations and increased competition,” the group said.