McCarthy recorded attributable income of R195,7 million in the year to June, but group chairman Brand Pretorius says the motor retailer will be challenged to show growth now that its dealership network had been rationalised.

McCarthy recorded attributable income of R195,7 million in the year to June, but group chairman Brand Pretorius says the motor retailer will be challenged to show growth now that its dealership network had been rationalised.


The increase of 103 per cent in attributable income was despite tough industry trading conditions, in which the high price of new and used motor vehicles subdued demand.


McCarthy also rationalised its dealer network in line with the representation strategies adopted by DaimlerChrysler SA and BMW SA. It sold nine DaimlerChrysler-brand and four BMW franchises during the year.


Although the group’s fully diluted headline earnings rose 64 per cent to R162,5 million, Pretorius said that given the reduced dealer network McCarthy "would be challenged to show growth" in the current year.


Pretorius said McCarthy had considered several options to compensate for the reduction of its dealer network. “These included broadening the existing franchise portfolio as the group had limited Delta and Ford/Mazda dealerships and expanding used car outlets, growing the McAuto aftersales service business,” quoted him as saying.


McCarthy’s motor franchise operations revenue grew by 21,5 per cent to R9,4-billion and Yamaha Distributors boosted pretax profit by 40 per cent to R58,6 million, but Budget Rent a Car, Burchmore's Car Auctions and McCarthy Fleet Services showed a 47 per cent dip in profits.


Pretorius is cautious about industry prospects in the current year, believing the new vehicle market will sustain a five per cent growth. “He put this down to lower interest rates, greater affordability in the light of a stronger rand and boosted business confidence,” the report said.


McCarthy ended the year with a 12,9 per cent share of the new-vehicle market and 10,9 per cent in the used market. Pretorius believed the group's reduced network would shift these holdings to 12 and 10,2 per cent respectively.

Original article from Car