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Motus about more than car sales, says acting CEO

Ockert Janse van Rensburg

Ockert Janse van Rensburg

14th November 2018

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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Motus is on track to list on the JSE on November 22, in the specialised retail sector, following the unbundling of the Imperial group into its two main businesses: Imperial Logistics and Motus, with the latter housing all of its automotive related activities.

Imperial was, in fact, founded as a single car dealership in downtown Johannesburg in 1948.

Osman Arbee, who has relinquished his role as acting CEO of Imperial will continue to serve as CEO of Motus. He is currently on medical leave following what the Imperial group referred to as a minor stroke, and is expected to resume the reins at Motus in January.

“He is doing well and will probably already start taking some meetings at the office this month,” says Motus CFO and acting CEO Ockert Janse van Rensburg.

More Than Cars Sales
Janse van Rensburg says one of the frustrations of running the Motus business portfolio has always been explaining to investors that Motus is not only about car sales and dealerships.

“We, in fact, have a much larger and more integrated model.

“By becoming a standalone business we’ll hopefully be able to demonstrate our defensiveness and annuity income streams a lot clearer.

“We have always seen how heavily new-vehicle sales statistics influence the Imperial share price, but new-car sales only make up 20% to 30% of Motus’ operating profit.

“The market seems to ignore the other 70%; the fact that we have all these other annuity income streams.”

Motus is the vehicle importer and distributor of the Renault, Kia, Hyundai and Mitsubishi brands in South Africa. It also sells used and new vehicles through a network of dealerships.

The company also imports vehicle panels and parts for these brands.

“Because our imported vehicle parc has grown aggressively since 2000, we have found that our annuity income streams from the panels and parts business have become quite significant. This, however, has largely been ignored by the market,” explains Janse van Rensburg.

Motus also has around 25% of the car rental market in South Africa, through its Europcar and Tempest businesses.

Its motor related financial services division finances vehicles in joint ventures, with large financial institutions such as with WesBank, but also manages the service, maintenance and warranty plans of its imported vehicle parc.

The last segment of the Motus business is aftermarket parts, through businesses such as Midas and Alert Engine Parts.

“As the economy shifts and the vehicle replacement cycle becomes longer, the vehicle aftermarket parts segment plays more and more into this space. These businesses are especially relevant in year five to 12 in a vehicle’s lifecycle,” notes Janse van Rensburg.

He regards the financial services and aftermarket businesses – “our two focused annuity income streams” – as the exciting, often ignored parts of the business.

“We certainly think these businesses have exciting prospects for organic growth, putting acquisitions to the side.”

As for local vehicle assembly, Motus remains open to the possibility of assembling vehicles in South Africa, should it make commercial sense.

The company already assembles trucks in Gauteng.

Acquisitions
Janse van Rensburg says it will be difficult to grow the vehicle importing business significantly, as Motus’ imported brands already have a 15% share of the new-vehicle market.

He believes, however, that there is room for acquisitive growth in both the UK and Australian retail markets, where the company already has a number of dealerships.

In the UK these opportunities could come from growth in the passenger-car dealership market and in Australia from a trend of family-owned groups selling off their dealerships.

“We are sitting at 30 dealerships in Australia. If we can get to 50, we would probably become a significant player in that country,” says Janse van Rensburg.

Material additional acquisitions will, however, probably have to wait for around 12 months, as Motus works to cement its position on the JSE, he adds.

Around 13% of Motus’ operating profit flows from outside South Africa.

“Our ambition is to grow this to not much more than 20% to 25%,” says Janse van Rensburg.

He believes Motus’ mostly UK and US investor base is seeking exposure to emerging market growth, rather than developed markets.

It was these same investors that prompted a rethink of the Imperial group as a combined logistics and automotive business.

“They always found our integrated model difficult to understand. They are very specalised in the US and it was difficult to sell the story of these two diverse businesses operating as one entity,” explains Janse van Rensburg.

He says whilst the unbundling process was indeed initiated by now departed Imperial CEO Mark Lamberti, it was always driven by the entire leadership tier within the business.

He adds that listing on the JSE on November 22 is unlikely to see “a value unlock on day one”.

Innovation Challenge
Motus is operating in an industry which market commentators say will change rapidly in the next ten to twenty years.

Janse van Rensburg believes Motus is ready for these changes.

The Motus senior management team travelled to Silicon Valley, in the US, and Berlin, Germany, earlier this year, in an effort to gain first-hand knowledge of the trends disrupting the mobility market.

The innovation portfolio resides under the motor related financial services CEO Kerry Cassel.

Motus aims to participate in the trend called Mobility as a Service (MaaS), she notes.

MaaS manifests itself through companies such as Uber and Taxify, and trends such as car-sharing, where people can use a car for a single trip, or a limited period, such as an hour or two.

It is, however, unlikely that these trends will play out in South Africa in a similar fashion as they do abroad, says Janse van Rensburg.

“The South African consumer is not using Uber in the same way as other markets. Here households still have vehicles and then they also use Uber. In the US Uber often replaces vehicle ownership.”

As for electric mobility, Janse van Rensburg believes that retailers will follow vehicle manufacturers into this space, rather than lead,  responding to manufacturers as they bring in more and more electric vehicles.

“And yes, there will be changes at dealership level,” adds Cassel. “But I see change, not a sudden death. Moving from the dealership of today to the dealership of tomorrow is more of an opportunity and we are well placed to make that transition.”

“Everyone within Motus is well aware of what is happening in the market,” says Janse van Rensburg. “It was also a bit of an affirmation when we were in Silicon Valley, the most disruptive market in the world, and people still drove cars.”

 

Edited by Creamer Media Reporter

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