Import and Distribution

The Import and Distribution business segment provides a differentiated value proposition to the dealership network, enhancing the revenue and profits of the entire automotive value chain.

Niall Lynch

CEO – Hyundai Automotive South Africa

Gary Scott

CEO – Kia Motors South Africa

Jaco Oosthuizen

CEO – Motus Vehicles Distributor

Thato Magasa

CEO – Mitsubishi South Africa


Geography

South Africa and neighbouring countries

Car parc

~1 million
2021 priorities
  • Enhance customer experience throughout the vehicle ownership cycle.
  • Continue to grow our market share of entry level vehicles and small and medium SUVs.
  • Expand value-added product offerings.
  • Grow parts and service business.
  • Manage costs and forward cover in line with the Group policy.
  • Expand sales of new vehicle model ranges.
  • Extend marketing to new marketing channels.
  • Invest in digital presence.
  • Explore multi-franchise opportunities.

Exclusive importer and distributor in South Africa

We import, distribute and supply vehicles and parts to the Group and independent dealership networks, government, and car rental companies.

Vehicle volume sales

~60% to 70%

through Motus-owned dealerships

~30% to 40%

through independently owned dealerships

We distribute and supply to:

Motus and independent dealer networks

Government

Motus rental brands (Europcar and Tempest)

Other independent car rental companies

Financial Services Integration
Full value chain presents unique opportunities for financial services, products, innovation and differentiation
* Market share of passenger and LCVs only.

Exclusive distributor in Southern Africa

Hyundai

Hyundai

in four countries

Botswana, Eswatini Lesotho and Namibia

Kia

Kia

in four countries

Eswatini, Lesotho, Namibia and Zimbabwe

Renault

Renault

in four countries

Botswana, Eswatini, Lesotho and Namibia

Mitsubishi

Mitsubishi

in eight countries

Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, Zambia and Zimbabwe

Nissan

Nissan

in four countries

Kenya, Malawi, Tanzania and Zambia

2021 performance

Market leadership

The automotive industry continues to recover from the COVID-19 crisis which disrupted supply chains, shrunk economies and reduced consumer confidence. Under these circumstances, we relied on our agility, entrepreneurial tenacity and trusted relationships to continue to deliver strong results for the year.

Motus is a long-standing distributor for recognised OEMs, providing them with market access through quality marketing, high levels of customer satisfaction and strategically located dealerships in growing urban areas. Market access, together with our proven ability to meet target volumes and the customer satisfaction scores that exceed OEMs requirements. This allows us to remain their distributor of choice in sub-Saharan Africa. Being the OEM distributor of choice enables us to offer competitive prices to our customers as well as exceptional service and innovative products and services that improve the quality of our customer experience throughout the vehicle ownership cycle.

Our importer brands have a significant market share, and the model range allows us to take advantage of the ongoing consumer trend of buying down to more affordable vehicles. We aim to exceed our customer expectations consistently to deepen their loyalty. Customers benefit from our integrated value chain and, in turn, allow us to generate revenue from sources other than just the vehicle sale.

We distribute and supply vehicles and parts to the Group and independent dealership networks, the government, Europcar and Tempest (Motus rental brands), and other independent car rental companies. Around 60% to 70% of our vehicle sales are generated through Motus-owned dealerships, with the remaining volumes generated by independently owned dealerships.

We relied on our agility, entrepreneurial tenacity, and trusted relationships to continue to deliver strong results for the year.

Our ability to enhance the customer experience across the vehicle ownership cycle remains critical to maintaining and growing our market share.

At 30 June 2021, our controllable share of the passenger and LCVs in South Africa was 16,1% (2020: 16,3%). Hyundai grew market share to 7,7% (2020: 7,0%), as did Kia who reached 3,7% market share (2020: 3,4%), Renault's market share reduced to 4,2% (2020: 5,6%) due to a decline in sales to car rental companies while Mitsubishi's market share grew to 0,5% (2020: 0,3%).

Despite interruptions in the supply chain, good inventory availability has assisted Motus through these supply chain disruptions allowing us to exceed our customers' expectations and have attracted new buyers. Low availability of pre-owned vehicles has supported margin growth. This together with the trend to buying down, has resulted in revenue growth to our mid-market vehicle offerings as well as market share growth. Our agility has also supported our growth as we adapted and responded to the change in the environment by rapidly improving our digital and online presence and offerings.

We continually assess our dealership footprint in response to developments in the operating environment and we will continue to refine the implementation of the multi-franchise model in dealership locations where it is appropriate.

Our broad product range includes a range of affordable models for consumers and our professional salesforce has adapted to the rapid shifts in consumer buying behaviour. They have invested time in engaging with customers online and through social media, ensuring that, under the tight COVID-19 protocols, customers only had to meet them face-to-face to complete the necessary paperwork before completing the vehicle handover.

As COVID-19 continues to impact global logistics supply chains, we actively manage vehicle availability with our OEMs. We expect that ongoing supply chain disruption and microchip shortages will continue to have a manageable impact on the supply of vehicles for the first half of the 2022 financial year.

Motus has not escaped the social unrest in South Africa unscathed. Two Hyundai dealerships in KwaZulu Natal were damaged and looted. As well as our bond store in Amanzimtoti. Although the Group did not suffer significant direct losses, we are impacted by the economic after-effects thereof.

New legislation and guidelines took effect on 1 July 2021, namely, POPIA, Right to Repair and AARTO. We have trained our staff and implemented plans to ensure we are compliant with these regulations. Modern vehicles require specialist equipment and extensively trained service technicians. Similar legislation to Right to Repair has been implemented in Australia and the UK without any significant impact on the OEM/dealer market. We do not anticipate a significant impact on the business as a result of this regulatory change.

Hyundai, Kia and Renault have forward cover for the Euro and US Dollar to February 2022, at average rates of R18,14 to the Euro and R14,93 to the US Dollar, including forward cover costs. The current Group guideline is to cover seven to nine months of forecast vehicle import orders, except for Mitsubishi where cover is taken for all committed orders.

Our ability to enhance the customer experience across the vehicle ownership cycle remains critical to maintaining and growing our market share as we continue to maintain the high standards for service excellence.

All the Importer OEMs have a suite of electric and hybrid vehicles that could be imported should government implement enabling legislation that would make the vehicles more affordable. Hyundai, Kia and Renault have made significant investment in the development of electric and hybrid vehicles. Given the lack of charging infrastructure and faltering electricity supply, we do not anticipate electric and hybrid vehicles playing a significant role in the South African automotive industry for the foreseeable future. We support the efforts to reduce emissions and are conscious of the environmental impacts of vehicles and will continue to engage with OEMs and governments in the geographies in which we operate.

Read more about the Group's ESG priorities.

Integration and optimisation

Our ability to leverage opportunities for digitisation and innovation that drive communication throughout the ownership cycle and reward customer loyalty has become a key focus, and we will continue to develop our initiatives and accelerate innovation while conservatively managing costs and inventory levels.

During the year, the Group purchased the remaining 40% of Motus Vehicles Distributor (formerly Renault South Africa), from Renault France for R250 million, and concluded a 10-year exclusive distribution agreement for South Africa and the neighbouring territories. The acquisition will enhance operational synergies and unlock value within the Group's integrated business model.

We continue to develop value-added initiatives to improve our customer experience. We are exploring the benefits of using data analytics to track consumer trends to improve our understanding of our customers and develop our responses to maximise related opportunities.

Read more about the Group's approach to innovation and technology.

Our people

Our people are critical to our success, and we continue to consider their safety and wellbeing our top priority. We have adapted how we manage our operations in this new COVID-19 working environment, ensuring that we have a safe workplace for our people.

Our culture of high performance, entrepreneurial spirit and innovation is supported by ongoing improvements in our ability to provide effective and relevant training, job support and career development and we continue to identify ways to enhance employee engagement in our business.

Read more about the Group's people strategy.

2021 financial performance

Revenue

R19 683 million

Operating profit

R912 million

Operating margin

4,6%
HY1 2021  
unaudited^
%  
change on  
HY1 2020  
unaudited^
HY2 2021  
pro forma*
%  
change on  
HY2 2020  
pro forma*
2021
audited
2020
audited
%
change on
2020
audited
Revenue (Rm) 9 687   (5) 9 996    38   19 683  17 411   13 
Operating profit (Rm)  421   (2)  491    24    912   827   10 
Operating margin (%)  4,3    4,9    4,6   4,7 
^ HY1 numbers are unaudited and are extracted from the interim published results for the six months ended 31 December 2020.
* HY2 numbers are unaudited and derived from deducting the HY1 results from the annual published results for the year ended 30 June 2021.

Revenue increased by 13% in line with the increase in sales volumes for vehicles (mainly through the retail channel) and parts, selling price increases and new model releases. The Import and Distribution segment sold 7% more vehicles at 41 255 units (2020: 38 495 units) for the year with increased volumes attributable to the recovery of the vehicle market. The vehicle market in South Africa grew by only 1% to June 2021.

Operating profit increased by 10% for the year mainly due to higher volumes of vehicles, panel and parts, assisted by increased margins as a result of the selling price increases. This was offset by the change in the mix of vehicles, higher costing rates relating to forward cover, lower assistance from the OEMs and increased freight costs.