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| Review of operations – Bid Auto continued |
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| Training |
Our spending on development was R18,5 million while 20 610 days’ training took place involving 10 190 course attendances and 7 352 training days being delivered to external clients.
The company’s training centres remain the only employer-owned, fully SAQA-accredited institutions in the motor industry able to offer national certificates across levels 2 to 5 of the National Qualification Framework (NQF) in vehicle service and maintenance, autotronics, sales and support services. McCarthy’s Automotive Artisan Academy managed 500 internal and 387 external automotive learnerships. McCarthy technical trainees achieved 252 qualifications at the NQF2 to 5 levels.
A further 41 learners were trained on our sales cadet programme. A management skills programme has been successfully piloted while 12 high potential managers and staff attended The Bidvest Academy and graduate academy.
Diversity management receives increasing support. All executives have attended a series of transformational experiences over five days and 1 082 managers and staff benefited from a two-day diversity training programme. |
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| Black economic empowerment |
Broad-based black economic empowerment and transformation remain a moral, strategic and business imperative for us. We have positioned our transformation agenda in accordance with the finalised BBBEE codes of good practice and Bidvest inter-divisional transformation structures.
Enterprise development remains a point of focus. Small medium micro enterprises projects have been implemented at our Nissan Diesel and Toyota dealerships and we have partnered a black businessman at our East London Value Centre.
Our partnership with the South African Taxi Council at Toyota Gezina goes from strength to strength and through Budget Van Rental we continue to give opportunities to historically disadvantaged South Africans.
Interventions such as the McCarthy emerging business leaders programme and the management understudy programme are in place to accelerate employment equity. |
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| Corporate social investment |
CSI spend increased year-on-year to R3,0 million. The focus remains on community upliftment and education.
In May, McCarthy coordinated the tenth year of the Rally to Read programme, an initiative focused on English literacy at primary schools in rural areas. Nine rallies, funded by 94 sponsors, set out in 450 vehicles to reach 143 rural schools employing 1 040 educators and serving 32 800 learners. Funds raised reached a record R5,5 million. A book of celebration, New Chapters was published in April and has been widely acclaimed. |
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| Innovation |
The McCarthy Value Centre-concept is groundbreaking and has the potential to create South Africa’s first fully integrated value-for-money vehicle parts and service network.
The world-class status of our state-of-the-art Client for Life customer relationship management programme was confirmed when Toyota SA signed a five-year contract with our Eliance subsidiary. The programme, which cost us R30 million to develop, is being rolled out to all local Toyota dealerships. The possibility of a follow-up international roll-out is being investigated.
Our call a car business continues to set the benchmark for electronic vehicle retailing. The system celebrated its tenth anniversary in August 2007. More than 50 000 units have been sold since inception via the internet and associated call centres. |
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| Challenges and disappointments |
The plan to source Russian vehicles for the mini-bus taxi market created a succession of challenges, despite our efforts in collaboration with SANTACO to ensure these vehicles met the demands of this testing market. In view of product quality and reliability concerns, we recalled all GAZ units. We spent R15 million on this customer-support programme, keeping our promise to the market. McCarthy will continue to provide aftersales support to existing owners, but will not import any new Gazelles. However, the local distribution of other vehicles from the GAZ International stable is under consideration.
It was decided at year end to close the student wheels division as the concept received limited market support. No staff retrenchments are envisaged as personnel will be absorbed into the growing chain of value centres.
HIV/Aids remains a continuing concern. Aids awareness and education were integrated into our wellness programmes at an early date and our Lifeline counselling service continues to do sterling work. These efforts have to be continually reinforced. |
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| The future |
The interest rate climate is expected to remain challenging and further exchange rate weakness may adversely affect vehicle affordability. South African consumers have taken on board a record level of debt. The net result in the automotive industry is expected to be a marginal decline in total vehicle sales and increased pressure on margins.
Despite these challenges, Bid Auto intends to pursue profit growth in 2008. This is a bold target. It reflects our confidence in the momentum being built up by our diversification strategy. However, we acknowledge that growth-focused initiatives such as the heavy equipment division, the importation and distribution of vehicles from China and the nationwide value centres are still under development, and will require substantial investment in the initial phases. This may affect the level of returns. We anticipate meaningful growth in the construction sector and will further broaden the brand bouquet at McCarthy Heavy Equipment.
In 2008, we will derive only a nine-month benefit from the operation of Viamax, but thereafter we expect this fleet management business to make a substantial contribution to Bid Auto. We are also upbeat about the contribution of our financial services and import and distribution activities.
Diversification has reached critical mass. Motor retailing accounted for 47% of our profit. In 2008, these activities will remain the biggest single contributor to the bottom line, but will probably account for just 38% of profit. The financial services’ share of the pie is expected to grow from 33% to 36%, while imports and distribution activities should double their contribution, from 7% to 15%.
Some short-term challenges are in sight, but we are confident about the continued growth of the South African economy, our industry and Bid Auto. We have a strong management team that has shown itself well able to meet the challenges of the future. |
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