First Car Rental owner CMH cutting fleet due to Covid-19
Combined Motor Holdings says reductions of its rental fleet will continue week by week as the economy reels
Combined Motor Holdings (CMH), the holding company of First Car Rental, is cutting staff in its rental fleet by about a third due to Covid-19. This follows a similar move by rival Motus Holdings.
The group’s car rental business was the earliest affected, the most severely affected, and is likely to be the slowest to return to some form of normality, the group said on Tuesday, though it is possible it will gain market share as Covid-19 takes its toll on smaller rivals.
CMH said in its 2020 annual report that it had already reduced its fleet by almost 15% over the past two months, and will be reducing this by 2%-3% a week until an optimum level is reached — which level is still unclear.
The staff complement has also been reduced by 15%, and a further 15% to 20% reduction is anticipated over the coming months, the group said.
The announcement follows that of Motus, the owner of Europcar and Tempest, which said on Friday that it is reducing its fleet by 40% and cutting staff levels between 50% and 60%.
First Car Rental has 484 employees, according to the group’s annual report. The report said it is fortunate that the retail motor dealerships will be able to assist in the disposal process through their used-vehicle departments. Most of the vehicles are affordable models, less than 18 months old, and with low mileage, the group said.
CMH has motor dealerships for numerous brands, including Volvo, Nissan, Toyota, Jaguar, Lexus, Mazda and Opel.
CMH said that headline earnings per share fell 10.8% to 254.8c in the group’s year to end-February, with the group citing the “sustained difficulties” SA’s economy has faced over the past three to four years, including low economic growth and load-shedding.
“I am disappointed with the 11% fall in headline earnings, but, given the circumstances, am satisfied that it is the result of the best efforts of management and staff,” CEO Jebb McIntosh said in the group’s report.
“The lockdown has had a disastrous impact on the economy when consumer confidence and affordability levels were already touching record lows, and unemployment had reached a record high,” said McIntosh. This is likely to put pressure on vehicle sales, even as the lockdown eases.
In afternoon trade on Tuesday, CMH’s share price was up 3.21% to R11.59, giving it a market capitalisation of R867m. The group’s share price has fallen 47.13% so far in 2020, compared to a 2.99% fall for the JSE all share.
Update: June 23 2020
This article has been updated with additional information throughout.