New vehicle sales in South Africa have recovered to levels last seen a decade ago, helped by lower interest rates, a stronger rand, pent-up demand and compelling value-for-money offerings.
But the recovery is not lifting all dealerships equally. The showroom floor is being reshuffled, with new entrant brands gaining share rapidly, especially Chinese names such as Chery and GWM. More established but still affordable challengers, including Japan’s Suzuki and India’s Mahindra, also continue to grow strongly.
Mature volume brands such as Toyota, Hyundai and Kia remain stable and relevant, but some traditional German and American marques, including Volkswagen, Audi and Ford, are under pressure as their pricing looks less competitive in an increasingly value-conscious market.
For Motus, which sells roughly one in five new vehicles in South Africa and whose traditional core brands include Hyundai, Kia and Renault, the strategic response is a variation on the old “if you can’t beat them, join them” playbook.
The group is increasing its exposure to fast-growing Chinese and Indian brands, while protecting the profitable parts of its existing portfolio and right-sizing or rationalising dealerships tied to brands under pressure. But this is not a quick turn of the steering wheel. Automotive retail is built on OEM relationships, dealership locations, franchise agreements, service infrastructure, trained technicians, specialist tooling, parts availability and customer trust. A standalone dealership built around one legacy brand cannot simply reopen the next morning as a Chery, GWM or Mahindra outlet.
This explains why the transition has been deliberate rather than dramatic. In South Africa, by far its largest market, Motus has expanded its exposure through sites such as Menlyn, which now includes Suzuki, Chery, Omoda and Jaecoo; Tygervalley, which sports Mahindra; and George, which offers GWM and Lepas. In the UK, roughly 20% of Motus’s passenger volumes now come from Chinese brands, including BYD, Jaecoo and Omoda, while in Australia about 30% of its passenger sites have Chinese brand representation.
The relaunch of Tata Passenger is also worth noting. It gives Motus exposure to a value-orientated Indian brand with a broad product pipeline and potentially strong appeal in an affordability-driven market, though it’s still too early to judge whether the venture will deliver meaningful scale.
The showroom is the most visible part of the business, but the group earns across the vehicle ownership cycle
Importantly, Motus is not just a new-vehicle sales story. The showroom is the most visible part of the business, but the group earns across the vehicle ownership cycle. Each sale can feed into finance and insurance products, servicing, replacement parts, maintenance plans, pre-owned trade-ins and, in some cases, rental fleet channels.
Pre-owned vehicles remain a material part of that model, though growth has lagged the new vehicle segment. The influx of competitively priced Chinese and Indian models means some buyers who might previously have bought a second-hand car can now afford a new entry-level or mid-market vehicle. That changes the economics of used cars and puts pressure on margins for pre-owned vehicles.
The aftermarket parts business, which contributes about 22% of group ebitda, provides a more defensive layer. As consumers hold on to vehicles for longer, demand for servicing, repairs, replacement parts, tyres, batteries, accessories and maintenance products tends to improve. This is valuable in a tougher consumer environment because the need to maintain a vehicle does not disappear when households come under pressure.
Mobility Solutions, which contributes about 17% of group ebitda, adds another annuity-style income stream. This part of the business is built around value-added products, insurance-related offerings, finance-linked solutions, fleet services and telematics-based mobility products. It helps Motus smooth some of the cyclicality inherent in vehicle retail.
Vehicle rental is another useful spoke in the wheel. Through Europcar and Tempest Car Hire, which together hold a 20.5% share of the South African market, Motus has direct exposure to business travel, domestic tourism and international tourism. The rental market remains competitive, with pressure on average daily rates, but it gives the group another channel to capture broader mobility demand.
The most striking feature of the interim result was Motus’s debt reduction. Net debt to ebitda fell from 2.1 times to just 1.5, helping net finance costs drop 23% to R78m. That lower interest bill accounted for roughly 71% of the group’s pre-tax profit growth, meaning a large part of the earnings uplift came from financial de-gearing rather than trading momentum alone.
At 5.7 times forward earnings and a dividend yield above 6%, Motus looks cheap. But that discount likely reflects market concern about the threat from new Asian competitors. In a fast-growing vehicle market, even a company losing share in certain brands can still hold volumes because the overall pie is expanding.
If market growth slows or merely normalises, however, a portfolio still too exposed to mature or pressured brands could feel the squeeze more sharply. The investment case therefore rests on how quickly Motus can align its showroom with evolving customer demand.
Raymond Steyn
