STRONG PERFORMANCE UNDER PRESSURE, GROWTH BY DESIGN
South Africa’s mobility sector exceeded volume expectations this year, with approximately 600,000 new vehicles sold over the 12 months. However, the headline conceals the reality that competition intensified, prices became more volatile, and margins shrank.
Andrew Velleman
Andrew Velleman (CEO, CFAO South Africa) frames 2025 as a test of disciplined execution in a volatile environment characterised by new entrants, currency fluctuations, margin compression, and rising customer price sensitivity. Growth did not happen by chance; we had to design it intentionally.
Leadership lessons that stand out from our 2025 year:
- We built resilience into the portfolio: CFAO SA’s breadth across mobility, material handling, automotive parts assembly and manufacturing, supply chain solutions, healthcare, and more isn’t about avoiding risk. It’s about reducing dependence on a single profit stream and allocating capital prudently. Diversification becomes strategic flexibility when cycles turn.
- Discipline is a competitive advantage: In inflationary conditions, managing working capital and inventory isn’t just financial housekeeping; it’s a strategic market tool. The focus on NPAT and ROCE over pure volume is a clear message: *volume without return is noise*. Strong returns offer the flexibility to invest, modernise and grow even when conditions are unstable.
- New entrants change the rules permanently: With new players moving from near-zero market share in 2019 to an estimated 15% by 2026, pricing pressure is no longer cyclical; it has become structural. The response isn’t to wait it out, but to operate with precision: understand where margins are earned or lost, cut inefficiencies, manage stock realistically, and maintain a clear view of cash and capital.
- Value is migrating beyond new-car sales: As new-vehicle margins compress, sustainable value shifts to used vehicles, finance & insurance, and after-sales service. Daily operational excellence is essential (reconditioning speed, underwriting discipline, service planning, consistent standards). It is where loyalty is built.
- Trust becomes the strongest differentiator: In a price-sensitive market, trust isn’t “soft”; it is an economic prerequisite. OEM-aligned maintenance, warranty-backed sales, and structured service protocols reduce customer uncertainty and stabilise demand when discounts are easily matched. Culture and collaboration across subsidiaries, supported by stronger digital capability, reinforce that trust.
Looking ahead
The posture is “cautious optimism”: invest for the long term, pursue acquisitive growth only within strict return thresholds, and continue strengthening the broader integrated mobility ecosystem (including localisation and dealer expansion). Prudence here is not conservatism. It is intentional growth under pressure.
