Stalling economy slows CMH sales
Combined Motor Holdings (CMH) says sales of its new passenger and light commercial vehicles have declined as cash-strapped customers seek lowerpriced models.
Combined Motor Holdings (CMH) says sales of its new passenger and light commercial vehicles have declined as cashstrapped customers seek lowerpriced models.
The decrease in CMH’s vehicle sales reflects an industrywide trend.
Earlier in October, the National Association of Automobile Manufacturers of SA (Naamsa), which represents vehicle manufacturers, reported a 0.9% drop in year-on-year sales of new vehicles.
At the time, Naamsa said consumers and businesses are likely to delay purchasing decisions on big items such as new vehicles until the economy recovers. Naamsa represents 41 car, light commercial vehicle, truck and bus manufacturers as well as all importers and distributors of vehicles in SA.
CMH, a dealer in several automotive brands including Honda, Isuzu, Land Rover and Nissan, said in the six months to the end of August sales of new passenger and light commercial vehicles fell 3.5%.
“Only the proliferation of sales incentive schemes and subsidised finance rates has kept this level from further decline. The used-car market fared no better, with an estimated 4%-5% drop in sales,” the company said.
In the six months, CMH increased revenue 2.6% to R5.7bn. Headline earnings per share rose 2% to 120.9c. It declared a dividend of 61c.
“Given the prevailing economic climate, with low growth in GDP and a disappointing consumer confidence level, the directors are satisfied with the marginal growth in headline earnings,” it said.
The company said its decline in new vehicle sales during the period was only 2%, compared with a national decline of 3.5%. CMH said trading margins came under pressure as dealers competed for market share.
The group said further constraints on discretionary income and low business levels are expected to continue throughout the financial year.
“The 25-basis-point decrease in the prime lending rate, and the potential of more to follow, will be offset by a substantial increase in the cost of fuel. The unemployment rate remains high, and general strike action more prevalent, though this appears to have been averted in the motor sector,” CMH said.