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2017 : Year of opportunity (If you stay positive)

Jan 25, 2017 Forecast, Aftermarket, Automotive, RobertKaiser, Economy, SouthAfrica


Robert Kaiser

The beginning of a year usually brings with it a sense of turning a new page albeit with mixed feelings: you look forward to good things but also have negative “what if” thoughts.

I for one am a firm believer that we are entering a great year for SA and the automotive sector, but undeniably there is both good and not-so-good stuff.

Not-so-good Stuff

  • Over regulation. Some sectors in industry are being constricted by regulation and red tape. This increases the cost of business, sometimes unnecessarily so and at times with unintended consequences that are more often than not negative. Expect to have to continue to grapple with this ogre.

  • Anarchy. An increasing phenomenon worldwide, just follow the news. It has become the done thing to burn and destroy. In SA, everything that some groupings don’t like becomes hashtag(#) whatever-must-fall. Imagine burning a school in protest because you want your local road tarred as happened in Vuwani in Limpopo in mid-January 2017. How can any sane person understand this?

  • Political influence on the national and international fronts. It will take a book to fully describe what is happening all over the world, SA included. Political influence affects business, even at micro level. Be aware and plan your business strategy accordingly.

  • Corruption. This monster isn’t going away anytime soon. It is international. Greed rules.

  • Oil games and fuel taxes. OPEC cartel action has been influencing the oil price and contributing to higher inflation, cost of living and business cost. Coupled with a floating currency such as the ZAR in an uncertain world economy and Government appetite for revenue (fuel taxes are such a nice soft option for them, watch February’s Budget in Parliament) are ingredients for a challenging situation.


Good Stuff

  • Good rains have relieved the worst drought in decades and the agricultural sector is jumping for joy, maize crops look promising and grazing looks great. An estimated maize crop in excess of domestic demand may even see SA exporting again. The drought cannot be considered as being over yet, but the resurgence in agriculture is sure to boost the economy and the automotive sector is going to benefit.

  • Possible downward trend in inflation. Food inflation is expected to go down and push the overall CPI inflation rate south. A great positive.

  • Improved business sentiment. There are already signs of improved business confidence; positivity creates positivity and the climate for business expansion and investment, with the prospect of job creation, is not a pipe dream for 2017!

  • Vehicle sakes down, but not out. Vehicle sales may be down over the past year, but think how many vehicles are still being sold every month. There are always opportunities and the challenge in down times is market retention. Businesses who prioritised customer care and great service to King Customer as a way of doing business reap the business benefits in times like this. The ones who didn’t are paying the price…

  • High age of the car parq. The average age of the vehicle parq, both passenger and commercial, continues to grow (12,7 years at last count) and this creates great opportunities for the spares and workshop sectors throughout the value chain.

  • The Stats SA Motor Trade Review, the latest of which was published in December 2016 and covers the period up to end October 2016, is an apt demonstration of just how relatively stable the automotive retail sector is, even in flat trading periods. (see table above)

  • Better labour relations. The employer and employee parties to the Motor Industry Bargaining Council concluded a wage agreement in late 2016 without strike action and we need to salute the Parties for coming to an agreement without industry disruption. This is welcomed by employers as well as employees and has set a positive tone for the way forward.

  • Stronger currency. The Rand has gained 20% in value over the past year and this is good news for our importers and for general business confidence. Overall a big positive factor.

  • Improvement in the commodities markets. Commodities are on the way up again and more mining activity means more business in the automotive sector.

  • Great business opportunities beckon. The fifth edition of Automechanika Johannesburg (incorporating a REIFEN Tyre Show) happens at Expo Centre Nasrec 27-30 September, with co-located Shows Futuroad Expo Johannesburg (Trucks/Buses/Commercial Vehicle Bodies) and Scalex Johannesburg (Logistics and Materials Handling). Covering the sub-Saharan African Region, the co-located Shows offer the largest business platform for the automotive and related sectors on the African Continent. Business opportunities will be plentiful and this business event is an imperative for the automotive, commercial vehicle, logistics and materials handling sectors.( see www.automechanikasa.co.za , www.futuroad.co.za and www.scalex.co.za

There is so much more good stuff but that, too, needs a book! Suffice to say that it is very clear that the Good Stuff outweighs the Bad Stuff by a long shot and that 2017 promises to be a great business year (if you stay positive!)

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