Motus warns on aftermarket
• CEO Arbee defends the guarantees of manufacturers
The CEO of Southern Africa’s largest vehicle group has questioned the move to overhaul the country’s automotive aftermarket industry, saying car owners are better off with the guarantees of the original equipment manufacturers.
The CEO of Southern Africa’s largest vehicle group has questioned the move to overhaul the country’s automotive aftermarket industry, saying car owners are better off with the guarantees of the original equipment manufacturers (OEMs).
SA’s top antitrust watchdog, the Competition Commission, recently published guidelines to allow consumers to service and repair their in-warranty vehicles at outlets of their choice without losing the warranties.
Motus, the importer and distributor of Hyundai, Kia, Renault and Mitsubishi vehicles and parts in SA, has an aftermarket business that distributes parts for major brands.
Speaking on Wednesday at the release of the company’s results for the six months ended December 31 2019, CEO Osman Arbee said OEMs such as BMW, Volkswagen (VW), Toyota and Nissan service about 3-million of the 12.5-million cars on SA roads. “What is this big fight about? Nine-and-a-half million cars are already serviced by non-OEMs,” he said.
“Every one will tell you that the consumer is better off without a service or a maintenance plan. Be careful of that perception. What does the consumer want? The consumer wants peace of mind. So if something happens to the car, it gets taken care of. The OEMs will stand behind the warranty plan. The service plan, maintenance plan and the warranty buy peace of mind.
“The most important thing is that the banks rely on these for residual value. They know the quality of car they are going to get back in three or four years’ time. Because it is under warranty, they know it is serviced with proper parts. They take comfort in that.”
Commenting on the company’s performance in the six months to end-December, Arbee said the SA market, which accounts for 67% of Motus’s revenue and 93% of operating profit, remained weak with depressed consumer and investor confidence. Arbee said problems at SA’s state-owned enterprises (SOEs) and power outages hampered growth.
In the UK, Brexit uncertainty aggravated weak business and consumer confidence He said the vehicle market there was unstable.
The Australian market had taken strain from, among other things, stringent lending conditions for consumers.
In the six months under review, Motus increased revenue 7% to R41.95bn, thanks largely to improved performance of the retail and rental, and aftermarket segments.
Operating profit was largely flat at R1.83bn. Headline earnings per share were up 9% at 517c and earnings per share increased 10% to 479c. Motus kept its interim dividend unchanged at 240c per share.
The import and distribution business increased revenue 4% and operating profit 11% due to 7% hikes in prices and volumes.
In addition to importing and distributing Hyundai, Kia, Renault and Mitsubishi vehicles and parts in SA, Motus has rights to distribute Nissan in Kenya, Zambia, Tanzania and Malawi.
Motus’s aftermarket parts segment increased revenue 5%.
The company has set up a distribution centre in Shanghai, China to procure and distribute to SA and other developing markets.
The retail and rental business increased its revenue 7%, mainly due to higher revenue from sales of previously owned vehicles. The business owns 321 dealerships in SA.
Arbee said that the full effect that the coronavirus would have on the production and supply of vehicles, the aftermarket-parts business and the global economy was unknown.
“These and other factors could adversely impact the local and global economies in the short term.
“Due to the weak macro and consumer environment that appears to be deteriorating, we are cautious about expectations for the short and medium term,” said Arbee.