Vehicles - Vehicle Retail, Rental and Aftermarket Parts

In light of challenges in the domestic operating context, growing and defending margin and market share in the passenger vehicle businesses remains a key priority. The division will continue to drive growth in selected businesses and consider revenue-enhancing acquisitions where appropriate.

Enhancing customer experience and business efficiency through implementing and responding to new technology is a key focus for the division, including the further expansion of its electronic sales platform. The appointment of a divisional chief information officer during the year is a key initiative in this regard, together with ongoing projects to upgrade or replace legacy systems.

The division has introduced various work-streams to evaluate and refine its current business structures to reduce complexity and costs and drive efficiencies, including the identification and disposal of non-core or unprofitable dealerships where feasible. It also aims to ensure that assets such as vehicle stock, properties and fleet are used optimally. Engagement with the group’s other vehicles businesses is ongoing, to identify opportunities to consolidate or eliminate duplicated functions.

The division expects the strong performance of its UK commercial vehicles business to continue. Building on the positive contribution of its S&B Commercials acquisition, the division is engaging with Mercedes-Benz and other manufacturers to expand further into the light commercial vehicles space, which represents a key growth opportunity. It will also seek to leverage its truck bodybuilding and conversion business to enhance its value proposition to customers.

The aftermarket parts business presents a significant African growth opportunity for the division given current market conditions. Although the process of introducing a consolidated warehouse in the previous year caused some disruption, it is now running well and positions the business to pursue substantial regional opportunities.

During the period, the car rental businesses (Europcar and Tempest), Auto Pedigree and panel shops were placed under a single management team to facilitate integration throughout the rental, accident repair and resale value chain. The addition of the Telesure contract for insurance repairs will continue to make a positive revenue contribution.

In the car rental businesses, the rollout of the administration system in Europcar is yet to be completed, owing to implementation challenges. The opportunities for operational efficiency and cost reduction this project presents, including the utilisation of a single fleet and simpler administration, should start to be realised in the second half of calendar 2017.

REVENUE 2016
R million
2015
R million
%
change
Vehicle Retail, Rental and Aftermarket Parts 41 045 37 547 9

OPERATING PROFIT 2016
R million
2015
R million
%
change
Vehicle Retail, Rental and Aftermarket Parts 1 677 1 677 -

OPERATING MARGIN 2016
%
2015
%
Vehicle Retail, Rental and Aftermarket Parts 40,9 43,4