Motus full-year sales up 7% to R113.7bn

Motus Holdings, South Africa's largest vehicle dealership, recently reported a 28% decline in annual headline earnings per share due to a challenging trading environment. In a recent interview with CNBC Africa, Motus CEO Osman Arbee discussed the key issues impacting the company's performance and shared his outlook for the future. Arbee highlighted the difficulties faced by the South African economy, citing high interest rates, election uncertainty, and a lack of job creation as significant challenges. However, he also emphasized the positive contributions of the company's offshore income, particularly from the UK and Australian businesses, which helped offset some of the domestic struggles. Despite the tough conditions in South Africa, Arbee expressed optimism about a potential turnaround in the near future. He pointed to impending reductions in interest rates, post-election certainty, and anticipated economic growth as factors that could brighten the company's prospects. Arbee projected that Motus could benefit from lower operating costs and improved customer affordability, particularly in the new and pre-owned car sales, parts, and car rental segments. He also noted the positive impact of decreasing debt levels and interest savings on the company's earnings. Discussing the competitive landscape, Arbee acknowledged the intense competition in the South African market, where oversupply of cars led to discounts and margin cuts. He highlighted the need for a balanced supply-demand equation to stabilize pricing and margins in the industry. Addressing questions about the car rental business, Arbee noted the recent growth driven by returning tourists but cautioned against expecting continued rapid expansion in the future. He attributed the current growth to a rebound from the COVID-19 related slowdown in travel. Arbee also explained the concept of 'money on the bonnet,' a practice where dealerships offer discounts or settle old car debts to facilitate new car purchases. In response to inquiries about unfair competition, Arbee discussed the challenges posed by manufacturers from China and government-owned OEMs engaging in cross-subsidization. He highlighted the uncertainty surrounding the influx of Chinese car brands into the South African market and emphasized the need for adaptability and competitiveness in the face of changing market dynamics. Arbee underscored the importance of strategic decision-making and market positioning to secure a significant market share amidst evolving competition.