For a company in South Africa’s cyclical automotive retail and distribution industry, Combined Motor Holdings (CMH) has delivered remarkably steady results over the years.
That consistency stems not only from its diversified business base — spanning motor dealerships, car hire and financial services — but also from the depth and experience of its leadership. CEO Jebb McIntosh, now in his late 70s, has been on the board since 1976, ensuring a disciplined, cautious hand. Longtime financial director Stuart Jackson, in the role since 1986, has been McIntosh’s steadfast counterpart in maintaining CMH’s conservative balance sheet and strong financial footing. That steady hand was once again evident in the first half of the 2026 financial year, when CMH reported a 23% rise in headline earnings.
Even though management was quick to point out that the figure was boosted by a soft comparative base in the prior year, when election-related uncertainty weighed heavily on consumer sentiment and vehicle sales, the results underscore CMH’s ability to steer through shifting economic conditions and evolving customer behaviour. Nowhere was this more apparent than in its retail and distribution division, the backbone of its operations and the primary driver of earnings.
After several years of subdued demand and shrinking margins, the domestic car market has finally found traction. Five interest rate cuts since September 2024, improved manufacturer incentives and a firmer rand have combined to create a more supportive environment. National new vehicle sales have surged in response, culminating in a standout post-period figure: September 2025 marked the best month for new car sales in a decade, with 54,700 units sold. It was the third consecutive month of sales above 50,000.
CMH’s own unit sales have kept pace with this revival, but the real story lies in how the group has adapted to a shift in consumer preferences. The days when South Africans aspired almost exclusively to premium European or Japanese brands are fading fast. Instead, value-for-money Chinese and Indian models have captured the imagination of middle-income buyers who prioritise features and affordability. CMH has positioned itself accordingly, with nearly half of its new vehicle sales now derived from these fast-growing emerging brands.
If retail and distribution was the star performer, the car hire segment proved the laggard
Supporting this structural change is Mandarin Parts Distributors (MPD). MPD specialises in supplying parts for out-of-warranty vehicles sourced in India and China, and its earnings growth has been significant. As these cars mature and warranties expire, MPD’s role will become even more important.
On the import and distribution side, the introduction of the Foton range has been another highlight. The Chinese brand, focused on commercial vehicles such as light trucks and bakkies, has met pre-launch expectations and now ranks among the top 10 in its segment nationally. Two additional variants are due imminently, which should enhance profitability and cement Foton as a meaningful contributor to group earnings.
The used car division, historically a stabiliser in CMH’s portfolio, maintained its steady form. The availability of ex-rental and demo stock, combined with price stability and better credit availability, underpinned volumes and margins. In an industry where residual values can swing wildly, CMH’s disciplined procurement and inventory management continue to pay off.
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If retail and distribution was the star performer, the car hire segment proved the laggard. Profit before tax declined by 8%, reflecting the dual pressures of intensifying competition and weaker demand in the insurance replacement market. Rivals have expanded aggressively, pushing daily rental rates lower, while a fall in insurance claims has reduced replacement activity. CMH’s First Car Rental brand has responded pragmatically by trimming its fleet, focusing on higher-yield segments and leaning into inbound tourism.
Overseas travel to South Africa has surged, and the company’s alliance with FlySafair, which continues to expand its route network, has strengthened its airport footprint and its visibility with international booking agents. With summer approaching, forward reservations suggest a healthy season ahead, and lower interest rates should help ease fleet holding costs.
The group’s financial services arm was the only segment to record a sharp drop in earnings, down 22%. This was driven by higher insurance claims, though management expects the claims ratio to normalise in the months ahead. Encouragingly, despite several years of subdued vehicle sales, policy take-up rates have improved, laying the groundwork for stronger annuity income in future.
On valuation, CMH trades at roughly eight times annualised earnings — not an overtly cheap multiple at first glance. However, once adjusted for the group’s substantial net cash position, which equals about 30% of its market capitalisation, CMH’s effective earnings multiple drops closer to six. This undemanding valuation, coupled with surplus cash that management has no immediate operational use for, has prompted CMH to propose a share repurchase in place of its usual interim dividend — a plan to buy back up to 15% of its issued shares. It’s a characteristically pragmatic decision, aimed at enhancing shareholder value rather than letting idle funds sit on the balance sheet.
With management and directors collectively holding more than 40% of the company’s stock, their interests remain closely aligned with those of ordinary shareholders.
CMH may not be a flashy company, but it is a long-established, consistently profitable and well-governed business that continues to adapt to a changing market.
For investors seeking stability, sound management and a measure of cyclical upside, CMH remains a steady performer worth keeping on the radar.
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