Audi

GLOBAL AND LOCAL MOTOR INDUSTRIES IN TURMOIL

 

The motor industry is in turmoil, whether it is globally or right here in South Africa. Globally the credibility, trustworthiness and honesty of the industry is being questioned, with reports of cheating on emissions, corruption, collusion, and safety recalls appearing virtually daily in the media – while here in South Africa the governing party is putting pressure on the industry to speed up the rate of transformation – in all its aspects.

Then there are big questions about electric cars, autonomous driving and car-sharing which are taking up huge amounts of the working day of motor industry employees from senior executives to a host of specialist task teams as they try to figure out priorities and the likelihood of various scenarios coming to fruition.

Then there is the threat of Tesla, a start-up company upstaging the “establishment” despite huge debt and big question marks whether it can ramp up production to meet demand. However, the major motor companies are taking on this rival and they have huge resources to back the electric cars that they are starting to roll out in first world countries.

There are other disrupters too, such as as the arrival of Uber and similar companies, ambitious plans for overall urban mobility as well as rapid growth in the mushrooming digital world, where the buzzwords include subjects like “artificial intelligence” and “connectivity.” They are already affecting the cars we buy and the way we buy and sell things, with a big impact on motor retailers.

It is certainly not a time when motor companies can confidently draw up five- and 10-year plans; they basically live by the seat of their pants and need to be able to adapt quickly to rapidly changing circumstances.

All these changes, current, future and imagined, are putting pressure on the automotive aftermarket too, not only in the way they do business, but also in terms of the shortage of qualified technical staff or people prepared to follow a technical career, working with their hands.

Then, here in South Africa there is a need to transform the motor industry and several proposals are on the table to speed up this aspect of the business. Serious negotiations are currently underway between the motor manufacturers, component makers and the Department of Trade and Industry with the ANC wanting to be able to put concrete proposals on the table at its elective conference at the end of the year.

The major proposal being put forward by the National Association of Automobile Manufacturers of South Africa (NAAMSA) is the creation of a R3.5-billion transformation fund which would, in turn, allocate funds to black ownership in the motor industry supply chain and the vehicle dealership network. Mike Whitfield, the president of NAAMSA, said in a recent interview that everyone the industry had interacted with in government about the initiative had “been very positive” about it.

In the meantime, the sluggish economy, and flat markets in terms of vehicle sales are resulting in motorists keeping their current cars for longer, which is good news for the automotive aftermarket.

However, where the big challenge is going to come for the local motor industry is to guess which of the new technologies such as electric cars and autonomous driving will come to a country like South Africa where we don’t even have fuel of a good enough quality to permit the use of the latest engine technology. There is also currently no timeline for upgrading local refineries, which will be extremely costly.

Looking at the practical implications it seems that emerging countries like South Africa may well have a smattering of the latest technology but most of our four-wheel transport is likely to continue with internal combustion engines, and vehicles very much like those we have at present.

However, even these present vehicles incorporate high technology components such as computer-controlled, turbocharged engines and transmissions, which can be very expensive to repair when they go wrong. So, the challenge for the local automotive aftermarket is to be able to keep these cars and bakkies on the road after warranties expire and in line with the widely varying levels of their income that owners can afford to spend on maintaining or repairing their vehicles.