- A trading statement from local vehicle distributor Motus appears to be preparing shareholders for bad news later this year.
- The group says growth is in the single digits and the local environment makes it tough to move new stock.
- Heavy discounts on vehicles also lower margins for both Motus and its partners.
South Africans can’t afford to buy new cars. That’s the word from motor vehicle distributor and service provider Motus in its latest trading statement.
While this statement doesn’t reflect the company’s full financial situation as it’s unaudited and unreviewed, it’s a good indicator. This trading statement must, according to the Johannesburg Stock Exchange’s Listing Requirement, be filed when a company is confident that the statement and results will align with a an error margin of 20 percent.
So then, what can we discover from this statement?
For one, growth is slow. Motus has told shareholders that revenue has increased for the last 12 months ending 30th June 2024 but by a single digit. Earnings before interest, taxation, depreciation and amortisation (EBITDA) is expected to remain in line with 2023 results.
Shareholders will also be getting less money. In 2023, earnings per share sat at 2008 cents, but estimates put 2024’s earnings between 1305 cents and 1505 cents.
The culprit behind this slow growth and loss is quite simply, the state of everything at the moment.
“The South African trading environment remains very challenging, marked by uncertainty created by the elections, high interest rates, fuel prices and energy costs. As a result of these factors, consumers are experiencing considerable strain on their disposable income. The higher-than-normal vehicle and parts price inflation, exacerbated by the impact of the weak Rand, has negatively impacted affordability,” Motus explains.
The distributor goes on to say that an oversupply of new cars from OEMs is easing up but pushing to move these new cars with additional discounts is lowering margins.
But even with discounts, new vehicles are simply unaffordable for most South Africans. Since July 2023, Motus has noted a decline in sales and even rental vehicles.
“The long-term strategic priorities of the Group remain unchanged and are focused on ensuring that we are the leading automotive group in South Africa, with a select international presence in the United Kingdom and Australia, and a limited presence in Asia and Southern and East Africa. We are confident that our diversified integrated business model, implementation of existing
strategic initiatives and the experienced management team, will successfully navigate the Group during these difficult times,” the company added.
Motus will reveal its full financial results on 3rd September when we’ll have a better idea of how the local vehicle industry is doing.
It’s unlikely that Motus will disappear from the local market, but we suspect those financials will be a grim read for anybody in the local vehicle sales sector.
