Zeda will invest in the renewal of its fleet next year, with the group expecting the supply of new vehicles to stabilise in 2023, says CEO Ramasela Ganda.
Zeda is a mobility specialist that incorporates the Avis and Budget brands. It is active in the vehicle leasing and rental sectors, and is set to list on the JSE on December 13, following its unbundling from Barloworld.
The global automotive market has seen the persistent short supply of new vehicles on the back of a semiconductor shortage, Covid-19-related shutdowns, trade wars and the war in Ukraine.
Zeda believes it may have perhaps overpaid for new vehicles in recent years, as it has been unable to source all its desired vehicles, with lower-specced units not always available.
On the flipside, however, a normalisation of vehicle availability should see buoyant used-car margins normalise, something which is currently boosting Zeda’s bottom line as it pushes these units into the market following the completion of service, says Ganda.
Zeda has 14 Avis car dealerships, as well as an online sales channel.
Apart from the improved availability of new vehicles, other good news for Zeda is that Ganda also expects a “significant recovery” in the South African tourism market as Covid-19 abates, which should boost vehicle rental numbers.
While car rental demand has improved, it is yet to return to prepandemic levels.
Zeda currently has a 79.1% utilisation of its rental fleet.
Ganda notes that Zeda has worked hard in recent years to diversify the business from its traditional tourism focus by, for example, adding vehicle subscriptions and heavy- vehicle leasing.
Zeda delivered its financial results for the year ended September 30 late last month, ahead of its debut on the stock exchange.
Group revenue was up 6.6%, to R8.18-billion, while operating profit increased by 52.8%, to R1. 26-billion.
The car rental business grew revenue by 9.7% to R5.98-billion, with operating profit surging 159.3%, to R861-million.
In the leasing business (Avis Fleet), revenue was down by 0.9.%, to R2.19-billion, impacted on by an adverse outlook on parts pricing, interest rate hikes and foreign currency fluctuation.
Operating profit declined by 18.6%, to R403-million.
“I look forward to leading this solid business into the future,” says Ganda.
“Today, Zeda Group is the largest and only integrated mobility provider in sub-Sahara Africa offering both short-term car rental and long-term fleet management and leasing solutions across 11 countries in Africa.”