Through this business, we manage and administer service, maintenance and warranty plans and develop and sell vehicle-related VAPS to owners of more than 750 000 vehicles. We are also a provider of fleet management services to corporate customers.
Product and services
This segment complements and leverages the integrated automotive value chain, providing high-margin annuity earnings.
Growth opportunities
Innovation and unlocking customer potential within existing and new channels, represents a significant growth and profit opportunity for the business. We have invested in technology to leverage consumer data, enabling us to offer personalised services aimed at enhancing the customer experience and improving customer retention.
2020 performance
Our core business is to build our financial services offering as an extension of Motus' vehicle businesses. Our vision to be a leading player in the mobility products and services industry will be achieved through continuous product and market innovation, increasing penetration in existing markets and diversifying into new markets.
We continue to grow our channels to market through joint ventures with strategic partners and tailored financial services products which benefit from access to their customer bases, leveraging our specialised expertise, data and product design ability. During the year, we launched a world-first warranty product in partnership with Discovery Insure. The product provides comprehensive and market-leading mechanical breakdown and electrical failure cover for 36 critical vehicle components with no cover limits. The product is offered to Discovery Insure customers and the tailormade premiums are determined using the telematics data of drivers on the Vitality Drive Programme. This programme encourages good driving and rewards drivers for driving well.
We continue to work on strengthening our relationship with independent dealers to drive the adoption of VAPS and targeted lead generation. The decision to expand our industry leading warranties and financial services products to prepaid plans for entry level vehicles and rental returns is increasing the volume of customer leads going into our call centres and will drive workshop throughput, increase parts turnover and improve customer retention.
Extended warranty and servicing plans In South Africa, the nationwide COVID-19 lockdown created a 19% backlog of the car parc requiring critical safety checks and servicing. LiquidCapital, which manages service and maintenance plans for Hyundai, Kia, Renault and Mitsubishi in South Africa, extended cover under these plans during lockdown, ensuring that our customers did not lose these benefits.
Integration and optimisation
The desirability of our brands, the delivery of innovative VAPS and mobility services, and our ability to consistently meet customer expectations are key factors in defending market share, deepening customer loyalty and growing our sales and customer base.
Our scale and integrated value chain enables us to provide cost-effective and competitive financial products and services to customers in a challenging economic environment, and will be supported by driving vehicle sales underpinned by pricing discounts and product enhancements to qualifying customers. In addition, we will continue to implement innovative digitisation initiatives to improve efficiencies and save costs. The implementation of business process automation technology to streamline processes and ongoing software system upgrades will be supplemented by enhanced data quality across the Group. This will enhance our understanding of customer needs and behaviours so we can provide them with cutting-edge service and relevant offerings and improve our ability to accurately price our VAPS offerings.
The Discovery Insure project was a successful big data project – two independent data sets were combined to extract meaningful customer insights and create a compelling and innovative new offering. The business continues to work on several projects which aim to further leverage our data and better serve our customers, and the broader motoring public.
In addition, we will continue to gain cost savings through improved procurement processes and negotiating preferential procurement deals with suppliers, focusing on negotiating fleet rebates on parts and labour through dealer and workshop networks. We are piloting a model focused on part procurement purchases of motor body repairers to provide full visibility of the supply chain, which will improve parts ordering and leverage insurer importer parts programmes.
Our people
2020 financial performance
# Operating margin includes profit streams without associated revenue
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| Revenue (Rm) |
1 126 |
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(1) |
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1 047 |
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1 |
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2 173 |
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2 172 |
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– |
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| Operating profit (Rm) |
483 |
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– |
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448 |
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(2) |
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931 |
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937 |
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(1) |
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| Operating margin (%)# |
42,9 |
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| 42,8 |
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| 42,8 |
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43,1 |
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| ^ |
HY1 numbers are unaudited and were released in the interim published results for the six months ended 31 December 2019. |
| * |
HY2 numbers are unaudited and derived from deducting the HY1 results from the full year published results of 30 June 2020. |
| # |
Operating margin includes profit streams without associated revenue. |
Revenue was stable, clearly demonstrating the resilience of the annuity income streams in this business, despite the negative impact of COVID-19.
