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Cartrack owner Karooooo is toying with the idea of suspending billing in the United Arab Emirates (UAE) to retain its growing client base in the kingdom amid surging fuel prices.The JSE and Nasdaq-listed group revealed this on Wednesday in its annual report, filed with the stock exchanges as part of its regulatory filing obligations.The group, worth R24.5bn on the JSE, said conflicts in the Middle East may negatively affect the economies of countries such as the UAE.“The conflicts in the Middle East have caused serious disruption to the economies of the most directly affected countries, such as the UAE, in which we have a presence, negatively affecting their short-term growth prospects. “We expect minimal growth in the UAE and may have to suspend billing to support and retain our UAE customers,” the group said in the regulatory filing.“We have already experienced an increase in the costs of fitment and sales in Asia due to sharp increases in fuel prices. Any increase in tensions between China and Taiwan, or other countries, including threats of military actions or escalation of military activities, could adversely affect our supply chain partners’ operations in these areas.”(Dorothy Kgosi) With the group still heavily reliant on South Africa for revenues, it has cast its eyes on the Middle East and Asia for growth.The oil-rich Middle East has endured a torrid start to the year after the outbreak of war in the region following strikes on Iran by the US and its ally Israel.Iran went on to launch a barrage of ballistic missiles and drones targeting multiple Gulf states, including Saudi Arabia, the UAE, Kuwait, Qatar and Bahrain — countries seen as close to the US.More than 2-million of Cartrack’s clients are in South Africa, accounting for much of the group’s 2.7-million client base.Part of the group’s growth strategy is to retain customers and drive margin expansion by providing enhanced and additional software solutions to existing customers while keeping its costs low.The company said there is a big underpenetrated global opportunity in mobility data analytics for smart transportation. “We believe a large portion of spending in the sector today is for outdated telematics offerings that do not provide the next-generation capabilities required by today’s customers across a broad range of transportation and mobility use cases,” it said.“In 2024, Fitch Solutions estimated there will be more than 1.7-billion vehicles in the world, including more than 438-million commercial vehicles, increasing to 2.1-billion total vehicles by 2032, including more than 544-million commercial vehicles.“Frost & Sullivan estimates that about 26% of commercial vehicles in South Africa were equipped with telematics devices in 2023, while Berg Insight estimates that fleet management system penetration rates in Southeast Asia and Europe in 2024 were 17.5% and 26.7%, respectively. “The low adoption rates suggest an underpenetrated market opportunity with significant growth runway.”
