Centurion Motor Exchange Business Plan — Risk Analysis
Stock ageing, residual value, credit and demand risk, with the controls and trigger points governing each.
Section 16 of 28
Risk Analysis
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- 1. Executive Summary
- 2. Investment Thesis
- 3. Company Overview
- 4. Problem, Customer Need and Value Proposition
- 5. Products and Services
- 6. Industry Analysis
- 7. Market Analysis
- 8. Customer Analysis
- 9. Competitive Landscape
- 10. Business Model
- 11. Go-to-Market Strategy
- 12. Operating Model
- 13. Management and Organisation
- 14. Strategic Plan
- 15. SWOT Analysis
- 16. Risk Analysis
- 17. ESG and Sustainability
- 18. Implementation Roadmap
- 19. Financial Plan
- 20. Funding Requirement and Structure
- 21. Debt Serviceability
- 22. Investment Case and Valuation
- 23. Sensitivity and Scenario Analysis
- 24. KPIs and Management Dashboard
- 25. Conclusion
- A. Appendix A: Scenario Parameters
- B. Appendix B: Year-1 Monthly Projections
- C. Appendix C: Sources and Glossary
Four commercial risks account for most of the downside; all are monitored weekly
Risks are scored on residual probability and impact after the mitigations listed. Impact is calibrated to the model: a score of 5 means a sustained effect of more than 20% on EBITDA or a threat to liquidity. The sensitivity analysis in Section 23 quantifies the largest risks.
Table 16.1: Risk register, prioritised by residual score
|
ID |
Risk |
Category |
P |
I |
Score |
Rating |
Mitigation |
Owner |
|---|---|---|---|---|---|---|---|---|
|
R1 |
Entry-level price competition from new Chinese and Indian vehicles |
Market / pricing |
4 |
4 |
16 |
High |
Mix weighted to R200k–R400k; weekly re-pricing; limit sub-R150k stock to 10% |
MD |
|
R4 |
Volume ramp slower than plan |
Demand / execution |
3 |
5 |
15 |
High |
60-unit launch floor; digital from day one; cost flex; Site 2 gate |
MD |
|
R2 |
Stock ageing and mispricing erode margin |
Operational |
3 |
4 |
12 |
Medium–High |
Pricing tool; 30/45/60-day reductions; 90-day exit; buyer clawbacks |
MD |
|
R3 |
Bank credit tightening reduces conversion |
Demand / credit |
3 |
4 |
12 |
Medium–High |
Four banks plus specialist lender; pre-approval; cash-buyer marketing |
F&I Manager |
|
R5 |
Floor-plan facility reduced or withdrawn |
Funding / working capital |
2 |
5 |
10 |
Medium–High |
Covenant headroom; monthly audits; second bank relationship by FY30 |
FOD |
|
R6 |
Loss of a founder |
Management |
2 |
4 |
8 |
Medium |
Key-person cover; deputies trained; share vesting and restraints |
Board |
|
R9 |
Site 2 execution: cost overrun or weak location |
Execution |
2 |
4 |
8 |
Medium |
Milestone gate; conditional lease; fixed-price fit-out; 10% contingency |
Board |
|
R7 |
Fraudulent, stolen or cloned vehicles |
Operational / legal |
2 |
3 |
6 |
Medium |
Police clearance, microdot and encumbrance checks; FIC Act controls |
FOD |
|
R8 |
Consumer complaints and regulatory findings |
Regulatory |
3 |
2 |
6 |
Medium |
Code-of-conduct processes; FAIS compliance; recorded disclosures |
FOD |
|
R10 |
Interest-rate increases |
Interest rate |
3 |
2 |
6 |
Medium |
+200bp costs c. R0.8m of FY32 EBITDA; DSCR stays above 1.7x |
FOD |
|
R11 |
Theft, hail or fire damage to stock |
Operational |
2 |
3 |
6 |
Medium |
Stock insurance incl. hail; covered parking for high-value units; security |
FOD |
|
R12 |
Reputational damage from poor reviews |
Market |
2 |
3 |
6 |
Medium |
Service recovery process; review monitoring; goodwill budget |
Sales Manager |
|
R13 |
Rand weakness shifting new and used price levels |
Foreign exchange |
2 |
2 |
4 |
Low |
No direct FX exposure; weekly re-pricing passes changes through |
MD |
|
R14 |
DMS outage or data breach |
Technology |
2 |
2 |
4 |
Low |
Cloud DMS with backups; POPIA controls; cyber cover |
FOD |
|
R15 |
Used oil or wash-water incident |
ESG / environmental |
1 |
2 |
2 |
Low |
Oil separator; registered collector; spill procedures |
Workshop Foreman |