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Car rental, leasing and sales group Zeda, which owns Avis, has introduced the popular Chinese brands to its fleet in response to consumer demand.Zeda CEO Ramasela Ganda said the Chinese brands are growing in popularity due to their price point and value offering. “Our procurement strategy holds us in good stead as we are brand agnostic and procure vehicles that are optimal, taking into consideration the total cost of ownership, uptime (effected by availability of parts and aftersales network) and residual value stability,” she told Business Day.“We have built solid relationships with OEMs [original equipment manufacturers] to understand their strategies and procure in line with all of these factors. We do procure vehicles for rental and leasing from the Chinese manufacturers. In instances where there is not sufficient empirical data, we get the rental vehicles on operating leases. This protects the sustainability of earnings.”The group on Tuesday reported improved first-half earnings led by a strong performance in its leasing business and rising car sales volumes.Revenue for the six months to end-March increased 3.2% to R5.5bn and profit before tax rose 5.5% to R520m.HEPS was up 6.1% to 201.2c. An interim dividend of 80c per share was declared, a 45% increase from a year ago.Zeda said its leasing business reported solid growth of 7.5%, while car sales volumes surged by 12.9% compared with a year ago. However, the car rental business partly negated this accomplishment.“The solid performance was weighed down by the car rental business, which declined by 2.7% due to operating in a highly price-sensitive environment,” it said. Greater Africa remains a significant contributor, generating 21.3% of group leasing revenue, supported by double-digit growth in markets such as Ghana, Zambia and Lesotho. However, Namibia and Mozambique remained under pressure, weighing on the portfolio.The group said it recognised a release of R31m in expected credit loss provisions for the first half, reflecting enhanced credit risk management through improved collections and reduced damage costs. This further contributed to earnings growth.The group said economic growth observed in the first quarter did not persist into the second quarter due to supply-side constraints and increases in fuel prices related to the Middle East conflict. It expects the momentum in the leasing business, including the public sector, to be sustained in the second half.The group expects to see improvements in its Greater Africa businesses as it focuses on performance recovery in Namibia, which is expected to cause a resurgence of the portfolio. The vehicle mix in its on-balance-sheet rental fleet favours smaller vehicles, placing Zeda in a stronger position in the used car market as consumers face pressure from higher fuel prices and potential interest rate increases.“This will support the growth of our used car business while our strategic intent to focus on retail channels provides margin enhancement.”After approval of the group’s Africa strategy, Zeda has retained Ghana as a strategic anchor from which to serve the West Africa region under Avis Budget Group’s broadened licence framework. “We have commenced mapping opportunities in West Africa where we can follow our customers and expand in a disciplined manner.”• This article has been updated with in information.
