Following a recent trading statement that it was reviewing all its businesses and would right-size operations, Bidvest has told staff that it intends to either sell or close down the Bidvest Car Rental division.

Bidvest Car Rental is one of Southern Africa’s largest car rental operations with a fleet of 13 500 vehicles spread across 120 locations in South Africa, Namibia and Botswana.

CE of Bidvest Automative, Steve Keys, is reported to have distributed a letter to staff over the weekend advising that about 50% of the car-rental company’s revenue was derived from air travel, and the start-up of domestic and international travel had been crucial to the company’s recovery.

He added that the car-rental division had been producing a return that failed to meet shareholders’ requirements even before lockdown was implemented. The tourism sector, which is vital for car-rental companies, would take a long time to recover from the effects of COVID-19, said Keys.

“Regrettably, due to these factors, we have taken the decision to disinvest from the Bidvest Car Rental business. This will involve closure and/or disposal of the business,” he said in the letter.

An industry source who wished to remain anonymous told Tourism Update that it was unlikely a buyer for the business would be found in the current environment.

“The car-rental division was under pressure even before lockdown began. An increase in online meetings has resulted in shorter business trips and lower rental hire periods. This was also compounded by the widespread adoption of Uber ride-hailing services in South Africa. With leisure travel being banned, car-rental companies are purely reliant on business travellers, who are reticent to send their staff on trips at the moment as infection rates continue to spike,” said the source.

In Bidvest’s June 1 SENS (Stock Exchange News Service) announcement, the group advised investors that it recognised that the pandemic would result in long term socio-economic shifts and long-term structural changes to the economy and business in general.

“The group will strategically review all Bidvest businesses and right-size operations to make sure that our operating models remain relevant and appropriate for the level of demand. This may lead to retrenchments across all six divisions in order to reinforce their competitive positions in the future, and ensure that the businesses have the potential of sufficient scale. Industries that are under incremental pressure include travel and related activities, while out-of-home hygiene offers good structural growth opportunities,” advised the report.

It also mentioned that Bidvest had established a R400 million (€20.5 million) Bidvest COVID-19 fund to assist South African employees who had not been working during the lockdown. It added that the Bidvest executive management team and board members had also taken 30% salary cuts and that these savings would be added to the fund. Bidvest has also contributed to the Solidarity Fund.

Tourism Update contacted Bidvest Car Rental and Bidvest Automotive for comment but had not heard back from either department at time of publication.