CAPE TOWN - BARLOWORLD is in talks with MMI Durban South Motors, a joint venture of the group with the Akoo family, to sell its motor retail business.
Barloworld said at the release of its interim results at the end of November that the future of the vehicle dealerships in its Automotive and Logistics division, and the deployment of capital for it, was being reviewed.
The Akoo family, well known in the KwaZulu-Natal business community, have owned vehicle dealerships since 1991 and reached the MMI Durban South Motors joint venture with Barloworld in 2003.
Yesterday, Barloworld directors said discussions about its disposal were “gaining momentum” and were expected to be concluded over the next few months,
Its motor trading division operates 43 new and used motor franchise dealerships in South Africa and Botswana, representing brands such as Audi, Ford, Toyota, Lexus, Isuzu, Mazda, Volkswagen and Mercedes-Benz. The dealerships also have supporting finance insurance products, after market services, and the business also invests in online platforms and tool-sets for asset disposals.
The share price of Barloworld, which has heavy equipment sales and vehicle rentals as its other core businesses, was up 2.2 percent to R91.88 yesterday morning, adding to a 31 percent surge in the share price from R70.11 at the end of last month.
Barloworld has been revamping its strategy due to the changed environment by expanding its geographic capability in the equipment business through the acquisition of Wagner Asia Equipment and accessing the less cyclical consumer sector through the acquisition of Tongaat Hulett Starch.
Following the slump in tourism and other travel through the Covid-19 pandemic, the group said at the end of last month that its car rental and fleet businesses had been consolidated under a single leadership team. Offers to buy the automotive portfolio were being reviewed, while the Automotive and Logistics divisions were integrated with centralised shared services.
Although the Automotive and Logistics divisions had seen a steady increase in activity as lock-down restrictions eased and new contracts were awarded, this year has however seen a sharp decline in new vehicle sales due primarily to the pandemic and weak economy.
National Association of Automobile Manufacturers of South Africa (Naamsa) data shows that domestic vehicles sales at 39 315 units in November fell by 12 percent, from the vehicles sold in November last year. Year-to-date, sales were 32.9 percent lower compared to the same period last year.
Naamsa said this month the economic scars of the Covid-19 pandemic were extreme and the domestic as well as global economic environment would remain uncertain and volatile over at least the next six months until effective coronavirus vaccines were and rolled out in South Africa and around the world.
Despite low inflation, marketing incentives available on new vehicles as well as low interest rates, real growth in vehicles was “still far away,” Naamsa said.
BUSINESS REPORT