Mobility Solutions
The Mobility Solutions business segment develops and distributes innovative vehicle-related financial products and services through importers, dealers, finance houses, insurers, call centres and digital channels. The segment is also a provider of fleet management services to corporate customers, including fleet maintenance, fines management, licencing and registration services. Mobility Solutions also leads the Group's innovation centre.
Previously known as Financial Services, the business segment has adopted a new name to broaden its purpose as well as its products and services offering. This will allow the business segment to evolve beyond traditional financial services, achieve growth and address the mobility needs of under-served motorists in South Africa and beyond. This lends further impetus to the Group's vision, future direction and broader purpose of 'Mobility for Good'.
Kerry Cassel
CEO: Mobility Solutions & Head: Innovation and Information Technology
2022 priorities
Continue to source new growth opportunities and:
- Continuously invest in innovation, digitisation and changing customer needs.
- Grow existing and new strategic partnerships within the broader insurance sector, finance houses and non-Motus OEMs.
- Identify acquisition opportunities that will complement and grow our existing business.
- Investing in reducing our carbon footprint, improving socio-economic conditions and ensuring regulatory compliance.
- Continuing to embed our value proposition to employees.
Geography
Innovation
Vehicles including third-party products under administration
Overview of products and services
We have evolved our offering over many years to enhance the vehicle ownership experience of our customers, identifying and addressing the under-served needs of motorists. This enables Motus to develop meaningful relationships with our customers as our integrated business model provides us with multiple touchpoints. The resilience of our customer base has been evident throughout the pandemic and, as vehicle owners return to normal driving patterns, this results in higher vehicle use, which drives higher utilisation of service and maintenance plans, generating income for the workshops across the Group as well as for Mobility Solutions.
Data forms the foundation of customer insights, which drive the development of continuously evolving products and services presented to customers at the appropriate time in their vehicle ownership journey. Compelling value propositions ensure that customers return to Motus for all their motoring needs and driving value for the Motus value chain.
Ultimately, we strive to deliver a stress-free motoring experience to our customers, while ensuring that every vehicle sold by Motus generates annuity revenue streams for the Group over its useful life.
The following strategic initiatives are driven primarily through Mobility Solution's new business development capability:
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| Value Asset Finance |
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Fleet Management |
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Consumer Mobility Solutions |
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Mobility Solutions value chain
This segment complements and leverages the integrated automotive value chain, providing annuity earnings and strong cash flows. Our ability to analyse proprietary data enables the accurate pricing of our offerings, vehicle profiling for the fleet business and management of claims. Through our leading service, maintenance and warranty plans, we add value to the customer while also unlocking revenue for the other business segments by retaining the customer within the Group throughout their vehicle ownership cycle.
- Access to bank credit to enable vehicle sales.
- Access to the dealership network provides significant point of sale opportunities.
- Access to market intelligence through the Group's vehicle businesses and its data.
- Ability to feed market intelligence back into the vehicle businesses, enabling the business to reach clients with the right product at the right time.
- Cash-generative revenue lines create strong annuity income streams that act as a significant hedge to the industry's cyclical nature.
- Proven track record of innovative product and channel development and deployment.
2022 performance
Over the course of this year, our core strategy has continued to demonstrate its value. Our annuity income streams once more proved an effective hedge against the cyclical nature of vehicle sales, and the impact of supply chain disruption due to microchip shortages. These income streams, however, remain subject to continuous change brought about by factors not fully within our control, for example, regulatory change, macroeconomic instability, and innovation and disruption in the automotive industry.
While our business has grown into a leading provider of VAPS, our traditional financial services business is under pressure, making innovation and carefully considered growth strategies central to our continued development. We also face significant changes in the financial services legislative and compliance landscape. We fully support these changes in the regulatory environment and believe that they will improve transparency and trust with our customers, while working to ensure that we implement the necessary process and document changes to comply with the regulations as they come into effect.
Conduct of Financial
Institutions (COFI) Bill
The COFI Bill is part of the Twin Peaks model of regulation and aims to strengthen the regulation of the financial sector in relation to customer treatment and general market conduct.
IFRS 17
New accounting standard for insurance contracts that replaced IFRS 4 for reporting periods commencing 1 January 2023.
Cell captive
regulations
The final draft Cell Captive Conduct Standard regulates the structure of cell arrangements to house insurance offerings.
Automotive
Aftermarket Guidelines
We are constantly monitoring changes in the industry to assess the impact of the guidelines on our business, which is currently not material.
The Administrative Adjudication of Road Traffic Offences (AARTO) Act, anticipated for 1 July 2022, was ruled to be unconstitutional by the Pretoria High Court on 13 January 2022.
Read more about the regulatory environment in the governance report.
Our vision is to be a leading provider of mobility solutions in the industry. We will continue to focus on addressing mobility needs of under-served motorists in South Africa and beyond through ongoing product and market innovation, increasing penetration in existing markets and diversifying into new markets to achieve growth.
We will grow our omni-channel offerings through joint ventures with strategic partners, and develop tailored financial services and products for varied customer bases, leveraging our specialised expertise, data and product design ability. We introduced new plan offerings and will continue to grow our VAPS market share in the dealer network. During the year, we also introduced reward plans to incentivise digital engagement and expanded our service offerings across multiple business units and will continue to do this over the short to medium term.
We will continue to leverage our substantial data management warehouses to unlock opportunities to monetise data, using predictive technology to allow us to identify when customers are potentially ready to purchase a new vehicle or VAPS.
We continue to focus on operating in an environmentally conscious and responsible manner and on our efforts to reduce our carbon footprint. We installed a small-scale solar PV system at our campus in Johannesburg and we are exploring the options available to upgrade the PV system to reduce the impact of prolonged power outages. We will continue to raise employee awareness around water, fuel and electricity conservation.
Read more about the Group's environmental and social priorities respectively.
Integration and optimisation
Innovation and unlocking customer potential in existing and new customer channels represent an opportunity for the business to grow, as do strategic partnerships within the automotive financial services sector. Our focus on digital VAPS and investment in technology to leverage consumer data and develop personalised services will enhance customer experience and improve retention. We are introducing new innovative technology to our partners and customers that creates efficiencies in the claims experience.
Our scale and integrated value chain enables us to provide cost-effective and competitive financial products and services to customers in an increasingly challenging economic environment. We will continue to implement innovative digitisation initiatives to enhance the customer experience, improve efficiencies and save costs. Enhanced data capabilities across the Group will supplement business process automation to streamline processes and ongoing software system upgrades.
The desirability of our brands, the delivery of innovative VAPS and mobility services, and our ability to consistently exceed customer expectations are key factors in protecting market share, deepening customer loyalty and growing our sales and customer base. With our increased focus on building strategic partnerships and developing new channels to market, we will continue to leverage opportunities to grow annuity revenue streams outside of our traditional channels.
Read more about the Group's approach to innovation and digitisation.
Our people
Our people deliver Motus' commitment to be a forward thinking, proactive and customer focused organisation. Our EVP is underpinned by purpose and driven by values, fostering a culture of innovation and improvement. It encourages our people to provide excellent customer service and achieve ongoing efficiencies. We ensure that we have a safe working environment for our people, as their safety and wellbeing continues to be our top priority.
Read more about the Group's people strategy.
2022 financial performance
Revenue
Operating profit
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HY1 2022 unaudited^ |
% change on HY1 2021 unaudited^ |
HY2 2022 pro forma* |
% change on HY2 2021 pro forma* |
2022 audited |
2021 audited |
% change on 2021 audited |
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| Revenue (Rm) | 1 028 | (2) | 1 079 | 12 | 2 107 | 2 019 | 4 | ||||||
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| Operating profit (Rm)#~ | 502 | 5 | 502 | 15 | 1 004 | 912 | 10 |
| ^ | HY1 numbers are unaudited and were released in the interim published results for the six months ended 31 December 2021. |
| * | HY2 numbers are unaudited and derived from deducting the HY1 results from the annual published results for the year ended 30 June 2022. |
| # | 2021 has been adjusted for the re-presentation to include share of results in associates and joint ventures. |
| ~ | Operating profit includes profit streams without associated revenue. |
Revenue increased by 4% and operating profit increased by 10% with all aspects of the business performing well. The increase was mainly due to higher network sales volumes, the increase in fleet vehicles to car rental companies, the recognition of income from Bank JVs and higher interest income due to increased cash balances.
The Group's increased market share in South Africa has also benefitted Mobility Solutions with an increase in new business written. This has increased the embedded value of the statement of financial position, which will translate into annuity income streams in future.
