72 I M P E R I A L H O L D I N G S L I M I T E D –
Integrated Annual Report
for the year ended 30 June 2014
D I V I S I ONAL
REV I EW
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V EH I C L E IMPOR T , D I S T R I BUT I ON AND DEA L E R SH I P S
WHERE WE OPERATE
South Africa is the anchor market for
this division. The South African market
accounted for R23 611 million (87%) of
revenue, R3 099 million (11%) of the
division’s revenue originated in Australia and
R390 million in the rest of Africa region.
MARKET OVERVIEW
South Africa
In 2014 we experienced tough trading
conditions in the
new motor vehicle market
in South Africa, with the market down 2% for
the 12 months to June 2014. The combined
impact of reduced disposable income,
interest rate increases, new vehicle price
increases caused by a weaker currency and a
high base created by strong volume growth
over the last four years affected growth.
Industrial distribution in South Africa also
remained a tough market, with forklift sales
under pressure and unit sales for the market
down 25% year-on-year.
Australia
The Australian new motor vehicle market
contracted marginally over the past 12
months, with only the sport utility vehicle
(SUV) segment, in which Ford is well
represented, showing growth. The recent
exit from manufacturing by Ford in Australia
has prompted a change in the mix from
rental to retail which impacted negatively on
volumes. However, we anticipate improved
margins as a result of this shift.
STRATEGY OVERVIEW
The division benefits from its exclusivity as
an importer and distributor, as well as its
extensive dealer footprint that is largely
owned by Imperial. Together with our
financial services businesses this enables us
to capture margin at virtually all points in
the motor value chain.
We believe this is a robust model and aim
to grow and diversify our brand portfolio
further by concluding additional distribution
agreements with manufacturers. This will be
done either though existing brands in new
regions or new brands in existing regions
(as with low-cost brands introduced into
South Africa from India and China with the
emerging consumer in mind and a distribution
contract recently concluded with Nissan
for East Africa).
This division imports its products in Dollars,
Pounds, Euros and Yen. The bulk of the
purchases are in Dollars.
We aim to grow aftersales parts and
services revenue, which is generated
through the growing motor vehicle parc sold
through our distribution network. In turn,
this generates business in our financial
services division, as we improve retention
of clients and further develop our market for
value-added motor-related products.
There is inherent cyclicality in these
businesses, which rely on the new motor-
vehicle market, and in the case of vehicle
imports, can be impacted by rapid
movements in the exchange rate. To offset
this cyclicality, earnings from parts and
services and financial services and products
provide annuity revenue to underpin the
vehicle distribution and dealerships business.
New vehicle sales in South Africa (1995 – 2013)
13 12 11 10 09 08 07 06 05 04 03 02 01 00 99 98 97 96 95
0
100 000
200 000
300 000
400 000
500 000
Passenger vehicles
Light commercial vehicles
Medium, heavy and extra heavy vehicles
Source: NAAMSA data
