Industrial conglomerate Imperial Holdings said on Thursday its motor retail, import and distribution unit was unable to deliver acceptable returns due to tough trading conditions.

"Motor retail business saw a continuation and further deterioration of extremely weak trading conditions. With a high fixed-cost component, these businesses are unable to deliver acceptable returns under current market conditions," it said in statement.

It added that both distributorships and dealerships divisions were profitable nonetheless.

It expects these conditions to remain until sufficient interest rate reductions have been effected to restore the financial position of consumers.

"Aggressive cost reduction initiatives are being pursued in our businesses and generally throughout the industry," it said.

Commercial vehicle operations were performing better than passenger vehicles, but were also slowing down.

Imperial, which also operates in car rental and tourism business, said the car rental market was under pressure because volumes were weaker than anticipated mainly due to a slow down in domestic leisure and inbound travel.

"We are satisfied with the rental rates being achieved. Used car volumes and profit margins are slightly weaker than the previous year. Volumes and profitability in our tourism operations remain acceptable," it said.

In its motor related financials services unit, the group said underwriting results in the insurance division were satisfactory although the credit life business remains under pressure from lower policy sales and higher lapses.

"Notwithstanding the fact that the majority of our investable insurance funds are in cash instruments, the overall results of the division are severely depressed by the performance of its equity portfolio in line with the market. Results from our banking interests are negatively affected by higher bad debt provisions in the consumer market," it said.

In Southern Africa, conditions in logistics divisions were satisfactory despite a slowdown in demand from customers operating in consumer driven sectors, it said.

General freight movement, warehousing and supply chain services are holding up although some weakness was expected going forward based on the general slowdown in economic activity in a number of sectors, the company said.

In Germany, where the bulk of our European logistics operations are based, the government has made available an €500-billion stimulus package to support financial markets.

"Freight volumes in the inland waterway shipping division still remain relatively strong, except for coal and iron ore transport where a slowdown is being experienced. Containerised and bulk freight handling in the port terminal operations remained busy but is expected to slow down in the remaining part of the year. The automotive and steel logistics operations have slowed down and this is expected to continue in the new year. The recent acquisitions in Europe are being successfully integrated and our new container capacity is coming on stream," it said.

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