Major vehicle retailer and finance house have created a new finance enterprise to serve the interests of CMH group and its customers.
Vehicle retailer Combined Motor Holdings (CMH) and finance house Wesbank have entered into a joint venture to create a new finance enterprise to serve the interests of the large CMH group and its customers.
The joint enterprise will be known as CMH Finance and will be managed by a board of senior personnel drawn from both companies.
CMH group managing director Jebb McIntosh said the group intended establishing a joint venture with a major bank when CHM released its financial results about three months ago.
“The partnership with Wesbank will create significant new profit opportunities for the two companies. It will account for as much as 15 per cent to 20 per cent of the CMH group’s profit within three years, but bottom-line effects would not begin to flow through until after the second year,” said McIntosh.
This incremental profit could be achieved without any downside risk to CMH and without unduly affecting the arrangements with existing discounting sources, McIntosh added.
Richard Moore, Wesbank’s general manager of dealer support, said the deal would double its existing business from CMH within a relatively short period.
CMH, which holds about four per cent of the total R60 billion vehicle market, currently channels about 40 per cent of its annual R1 billion retail business to Wesbank.
CMH group chairman Maldwyn Zimmerman said the CMH Group generates in the order of R1 billion retail finance business annually, and the new venture with Wesbank would ensure that a meaningful proportion of the profit opportunities flowing from this business would be retained.
The company’s business is that of an investment holding company for the group, providing centralised control over the strategic planning, finance and administration of its subsidiaries.
Through its subsidiaries the group has significant interests in the retail motor sector, holding franchises for the sale of Opel, Isuzu, Nissan, Nissan Diesel, Fiat, Alfa, Ford, Mazda, Lada, Jaguar, Toyota, Honda, Lexus, Volvo, BMW and Land Rover.
In addition to the financial services, the group also owns National Car Hire and offers full maintenance leasing and various insurance products.
