Proportion of SA households who can afford a vehicle is low, says CMH

Group expects new and used vehicle sales to increase by 10% this year.
The motor retail, car hire and financial services group has achieved a profit margin above 5% for the first time. Image: Shutterstock

JSE-listed vehicle retailer Combined Motor Holdings (CMH) has warned that South African households are facing increasing financial pressure and the proportion who can afford a vehicle is low.

However, CMH CEO Jebb McIntosh said on Tuesday that despite this and other threats to the South African economy and vehicle sales, new vehicle sales are expected to rise 10% in the year ahead and spawn a similar demand increase in the used vehicle market.

McIntosh said new vehicle sales for the 2022 calendar year are projected to increase to 480 000 units from 438 000 in 2021.


Naamsa, the automotive business council, reported on Tuesday that total new vehicle sales to the end of April, at 173 299 units, are 14.8% higher than the 151 022 vehicles sold in the corresponding four-month period in 2021.

This follows new vehicle sales increasing by 4.3% to 37 107 units in April this year from the 35 591 vehicles sold in the corresponding month last year, despite the impact of the recent severe floods in KwaZulu-Natal.


McIntosh said the threats facing the South African economy and the vehicle market include:

  • Expectations of low economic growth, with a continued rise in interest rates and fuel prices;

  • The possibility of continued new vehicle supply constraints;

  • Load shedding; and

  • A possible fifth wave of the Covid-19 pandemic, although the likelihood of a renewal of lockdown restrictions is considered remote.

McIntosh said the 30% increase in new vehicle sales last year belies the stock shortage in the second half of last year, adding that there has been speculation regarding what level of sales could have been achieved had supply not been an issue.

“I believe that the increase would not have been significant, and that perhaps a 10% increase in supply would have satisfied demand.

“While the 30% increase to 450 000 units is welcome after the 347 000 sold in the Covid-affected prior year, the level is still way below the economically-depressed years of 2017 to 2019, during which sales of 520 000 to 530 000 were achieved,” he said.

Financial results

McIntosh’s comments coincided with the release of CMH’s financial results for the year to end-February 2022, which he described as “exceptional”.

The group recorded a 25% increase in new vehicle sales and a 4% increase in used vehicle sales.

McIntosh said the group’s latest financial results are a classic case of preparation meeting opportunity, with tough and stressful decisions and actions taken during the previous year bearing fruit.

Boosted by improved performance from all motor retail franchises, car hire and financial services, CMH grew headline earnings per share by 117.4% to a record 501 cents from 230.4 cents in the previous year.

Motor retail accounted for 66% of CMH’s total profit compared with 86% in 2021, with car hire contributing 23% and financial services 11%.

Record profits were recorded in CMH’s four motor retail departments – new and used vehicle sales, parts and workshops.

Revenue rose 30.2% to R11.17 billion from R8.58 billion.

McIntosh said this revenue growth was achieved largely as the result of improved new car sales, driven by the add-on brands which are growing in their contribution to the group, despite the national shortage of inventory during the second half of the year.

He said the constraints on availability enabled dealers to earn greater margins and a higher penetration of value-added products – while on the car hire side, improvements in average revenue per hire day and fleet utilisation rates produced higher overall returns.

McIntosh said the combined result was an increase in the gross profit margin from 17.4% to 18.5%.

“While this may not appear significant, because the group sells high value products, the quantum impact is meaningful,” he said.

Operating profit increased by 75.7% to R606.1 million from R345 million, with the operating margin improving to 5.4% from 4%.

McIntosh said this is the first time the group has achieved a profit margin above 5%, adding: “I am not aware of any retail motor/car hire group that has achieved better.”

Shareholders’ equity reached a new peak of R1.1 billion, and cash resources increased to R817 million.

A dividend for the year of 225 cents, 80% higher than the 100 cents declared in the prior year, has been recommended.

Shares in CMH closed unchanged on Tuesday from the previous closing price at R28.

McIntosh said the average price of CMH’s shares improved to R23.30 in its 2022 financial year from R12.95 in the prior year.

However, CMH’s average share price was R24.07 in its 2019 financial year, which ended prior to commencement of the Covid-19 pandemic.

The group’s market capitalisation improved to R2.094 billion at end-February 2022 from R1.159 billion in the previous year.

Listen: CMH CEO Jebb McIntosh on results, the impact of the KZN floods, the chip shortage and more



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