Automotive group Motus, which provides car rental through the Europcar and Tempest brands, may retrench more than half its rental business staff and reduce branches in its car rental division as Covid-19 continues to batter the outlook for domestic and international travel.

The group has initiated retrenchment processes and early retirement in its rental business, which could affect 50%-60% of staff, and aims to close 20 branches.

Motus joins companies such as Cell C, Sasol, SABC and ArcelorMittal that announced plans last week to cut staff numbers adding to the high employment rate, which is 29%.  

In its 2019 financial year, Motus had 117 rental outlets across Southern Africa, with the group reporting it had about a quarter of the rental market. It will also be reducing its rental fleet by 40%. In the six months to December, the retail and rental subsidiary contributed 70% to group revenue.

Retrenchment processes could affect about 1,900 out of 15,000 Motus staff in SA, including 900 in the car rental division, said CEO Osman Arbee.

This comes after months of lacklustre demand during SA’s lockdown. This pressure is expected to continue despite restrictions being lifted, as people may seek to avoid travelling, he said. “By the time we see a light at the end of the tunnel in terms of tourism it could be January next year,” said Arbee.

Replenish quickly

The company is also cutting its fleet, but as an importer and distributor of cars it will be able to replenish this quickly in line with demand, Arbee said.

The group, which is also a distributor and retailer of accessories and aftermarket parts for out-of-warranty vehicles, said headline earnings per share would fall 70%-80% in its year to end-June. Operating profit, which the company said is a far better indication of its underlying performance, is expected to fall 35%-50% from the prior period’s R3.6bn.

Motus was unbundled from Imperial Holdings and listed on the JSE in November 2018.

The group has been battered by Covid-19, which has caused vehicle sales to fall off a cliff, while the closure of airports has affected the group’s rental business.

SA new-vehicle sales plunged 98.4% year on year in April and 68% in May 2020, the group said.

“As the economy transitioned to level 3 lockdown with dealerships allowed to resume operations, early indications suggest an improvement in vehicle sales in June 2020 compared to May 2020,” the update reads.

Arbee said on Friday that Motus is seeing the effect of pent-up demand as SA’s economy reopens.

The group is fortunate in terms of the size and extent of its footprint, and that its dealerships have taken it on themselves to improve their online presence during lockdown, he said.

“We have to adapt to a new normal where people will be working from home,” he said. The group aims to be much more proactive in terms of attracting customers regarding offerings, and making their lives easier by giving them what they want and need, he said.

On Friday, Motus’s share price closed 10.26% higher at R34.08.

• Update: June 19 2020  
This article has been updated with information throughout.