Strong performance under pressure, growth by design
Andrew Velleman, CEO, CFAO South Africa
31 March 2026
South Africa's mobility sector surprised many this year. Around 600,000 new vehicles were sold in 12 months, well above most forecasts. However, the headline number hides what operators felt every day on the ground: the market grew louder, faster, and more competitive, while margins got thinner.
At CFAO South Africa, the 2025 Financial Year was characterised by disciplined execution amid a volatile environment shaped by aggressive new entrants, currency fluctuations, margin compression, and heightened customer price sensitivity. Yet beneath these challenges lie structural opportunities. The year was not just about recovery; it was about recalibration and, in some sectors, reinvention. The market surprised on the upside, but growth was not easy to achieve. It required realignment, cost-conscious strategies, and consistent execution across our subsidiaries.
Portfolio breadth: resilience by design
One of CFAO South Africa's strengths is that we are not a single-focus business. While this diversity does not eliminate risk, no structure can, it lessens reliance on one profit stream and allows for prudent capital allocation.
Each vertical strengthens the group's integrated ecosystem. Our diverse presence across CFAO Mobility South Africa, CFAO Equipment South Africa, Toyota Tsusho Africa, Africa Mobility Solutions, Subaru Southern Africa, CFAO Healthcare South Africa, and Aeolus offers both defensive resilience and strategic flexibility.
In simple terms, when one part of the economy slows, a diversified portfolio can help keep momentum. It also allows us to invest in the wider mobility ecosystem, so that we build resilience rather than chase short-term spikes.
Discipline is non-negotiable
In an inflationary environment, working capital is not just an accounting item; it is a competitive tool. Poor inventory management leads to quick market penalties. Cost discipline is non-negotiable. It is ingrained in the CFAO Group's culture, as our CFO, Guillaume Thaumiaux, emphasises.
That is why fiscal discipline at CFAO South Africa has become non-negotiable. We have tightened stock management, scrutinised operating costs, and assessed investments against clear return thresholds. We track performance using NPAT and ROCE, not only top-line volume, because volume without return is noise. This approach is about protecting choice. Strong returns generate optionality: the ability to invest, acquire, modernise, and grow; even when conditions are unstable.
A market influenced by new entrants
The key driver in the market has been the rapid emergence of new entrants. In just a few years, they have shifted from the margins of the industry to holding a significant share of the showroom floor, rising from virtually no market presence in 2019 to around 15% by 2026. Their scale, speed, and pricing have transformed competition, particularly in entry-level segments and the used-vehicle ecosystem linked to them.
Thaumiaux explained simply: selling price pressure is now a permanent feature. This matters because it changes the approach. When pressure is constant, you don't wait for it to pass; you adapt your strategy accordingly. The key question is: how do you build a business that delivers consistent performance when pricing power is limited? The answer is to operate with precision. This involves understanding where margins are earned and lost, reducing inefficiencies in the operating model, and maintaining a clear view of volume, cash flow, and return on capital. It also requires taking a strict, realistic view of stock.
Where value is created now
New-vehicle sales volumes increased, but margin compression has changed industry economics. The focus is shifting towards areas with more sustainable value: used vehicles, finance and insurance, and customer-focused after-sales service. These sectors may seem less glamorous than the headline-grabbing battle over new-car pricing, but they are where lasting customer relationships are formed, and where consistency matters more than promotions. They demand operational excellence daily: efficient reconditioning processes, strong underwriting discipline, service capacity planning, and clear standards.
Our business outlook for the year is a blend of cautious optimism and measured confidence. Mobility has solid fundamentals, especially in the used-car market, F&I, and after-sales services. However, succeeding in 2026 will not rely solely on volume metrics. Reputation, empathy, and collaboration remain vital to our success. Customer-centricity, teamwork, and consistency are always essential.
Trust is the strongest differentiator in a price-sensitive market
When consumers face pressure, they become more cautious. They compare more, delay decisions, and have less patience for disappointment. Trust is not a "soft" factor; it is a strategic economic advantage.
Collaboration across subsidiaries has enhanced operational unity and market perception. Over the past five years, we have concentrated on building trust both internally and externally. That cultural shift is now reflected in the way the market views us. Our investment in digital capabilities, including renewed brand positioning, improved web presence, and cold sales call-centre initiatives, has also started to create additional momentum.
OEM-aligned maintenance, warranty-backed sales, and structured service protocols provide greater certainty for customers. When customers feel secure, they tend to behave more consistently. This stability is crucial in volatile markets where discounts are easily matched. Our approach is pragmatic: service standards and reputation foster long-term earnings, while purely transactional competitors struggle to encourage repeat business.
Tempered expectations, clear priorities
Long-term acquisitive growth remains part of our plans, but only within strict return limits. South Africa is highly competitive, cost-focused, and relatively import-light compared to many other African markets. Our capital allocation reflects this: CFAO South Africa invests where returns are clear, where risks are understood, and where execution capability is proven.
Beyond retail, our manufacturing and energy investments are progressing too. These are not quick-return projects. They are long-term commitments aimed at strengthening the mobility ecosystem and building medium-term resilience.
Looking ahead: prudence is not conservatism
Performance does not solely depend on market momentum. At CFAO South Africa, we follow a deliberate strategy that enables us to grow intentionally, not by luck. We will continue to foster a prosperous future for the business and our team through disciplined capital allocation, consistent service delivery, and the operational focus needed to perform under pressure.
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