Confidence remains

Confidence in the South African auto industry remains high with ongoing major investment projects in both plant and people – despite the concerns some have raised about ‘alternative’ facilities being opened in other African countries.

BMW Group South Africa  has put its best foot forward with the opening of its news R73-million Plant Rosslyn Training Academy able to host 300 apprentices a year.

In 1978, exactly 40 years ago, BMW Group South Africa opened its first training centre at BMW Plant Rosslyn. Development and empowerment of workers for the automotive and manufacturing sectors has been a focus ever since. Even in this pre-democracy era, the company was ahead of the times in training learners irrespective of their ethnic background.

Since then 2 000 people have been employed by BMW Plant Rosslyn, after successfully being trained at the Training Academy.

Tim Abbott, CEO BMW Group South Africa and Sub-Saharan Africa, says: “Global automotive production stands on the brink of momentous change with an increased focus on digitalisation and electrification. The workforce of tomorrow needs to keep pace with these trends. At BMW Group South Africa we are investing in the skills of the future.”

The facility focuses on both theoretical knowledge and practical application. Modern manufacturing skills such as robot programming, Advanced Computer Numerical Control (CNC) simulation and training on electric vehicles have been included in the new Academy.

An accredited Trade Test Centre has been incorporated into the building, allowing learners to achieve their trade qualification in-house. This functionality will also be extended to the public in the course of 2018.

Minister, Prof Hlengiwe Mkhize (Department of Higher Education and Training) adds:  “In June 2017, Cabinet approved the Human Resource Development Strategy towards 2030. One of the strategy programs talks to the skills that are produced based on the partnerships that can be encouraged within the country.  The country can only achieve this if companies such as BMW continue to encourage Work integrated Learning. Students from the TVET colleges will benefit immensely with such partnerships.”

The Training Academy will continue to provide skills development for existing BMW Group South Africa employees and managers. This includes training on the advanced technologies that will be used in the production of the new BMW X3, which will kick off within a couple of months.

In addition, the following programmes will be offered for external applicants:

Learnerships:

  • Mechatronics
  • Autotronics

Trades:

  • Millwright
  • Electrician
  • Fitter
  • Fitter and turner
  • Motor mechanic
  • Spray painter
  • Panel beater
Advertisements

Rwanda a go for VWSA

Volkswagen South Africa’s previously announced plans for an operation in Rwanda kicked into high gear in the capital, Kigali, today with the formal registration of the company Volkswagen Mobility Solutions Rwanda.

This means the roll out of Volkswagen’s integrated automotive mobility solution, a first for the Volkswagen Group, under the auspices of Volkswagen Group South Africa (VWSA), which is responsible for the Sub Saharan African Region.

Thomas Schaefer, Chairman and Managing Director of Volkswagen Group South Africa, says: “In December 2016 Volkswagen signed a Memorandum of Understanding (MOU) with the Rwanda Development Board (RDB) to conduct a detailed study to develop a business case for Volkswagen to introduce an integrated automotive mobility concept in Rwanda, which would be a first for Volkswagen worldwide.

“Our studies are complete and we believe we have a business case that will work and we are now ready to commence with the implementation of our plans for Rwanda. In short after today there is no going back, we are now fully committed to implementing our unique integrated automotive mobility solution in Rwanda together with Rwandans.”

VWSA chose Rwanda as the country in Africa to study the feasibility of an integrated automotive mobility solution for the following reasons:-

  • There is political stability and zero tolerance for corruption
  • There is dynamic economic growth of some 7% per annum
  • There is a young and tech savvy population
  • Rwanda is a leader in innovation and technology
  • Volkswagen have received strong support for our plans from Government and had great cooperation and support from the RDB
  • There is a real need for modern mobility solutions
  • Kigali is spearheading the smart city agenda

Volkswagen will adopt a phased approach in the implementation of the integrated automotive mobility solution and the first phase will focus on:

  • Establishing a local Mobility Services company
  • Oversee the establishment of a Volkswagen manufacturing and sales entity
  • Set up a vehicle assembly operation
  • Establish a sales and service structure
  • Set up a training centre
  • Offer the new mobility solution

“The production facility will have an initial annual installed capacity of up to 5 000 units, with 2018 being our start-up year. The Volkswagen product portfolio will initially include the Hatchback Polo, the Passat, a sedan and possibly the Teramont, a large SUV,” says Schaefer.

Volkswagen will run the production and retail operations, which will include the importation of other Volkswagen models to be sold on the Rwandan market.

The current business plan assumes employment of between 500 and 1 000 people in Kigali in phase one for Mobility Solutions admin, production, training, sales and service and the drivers..

A Rwandan software development start-up company Awesomity Lab has been appointed to develop the mobility App. Volkswagen is also in negotiation with other potential Rwandan suppliers.

The first service to be offered will be community car sharing, which will launch in quarter two, with around 150 vehicles in service within a few months. This will be followed by a ride hailing service with some initial 150 vehicles planned in the medium term still in 2018.

In 2019 public car sharing with some initial 250 cars planned will be launched and this will be followed by a shuttle service and lastly a peer to peer car sharing service is envisaged.  These numbers are based on assumed market demand, as such an innovative integrated mobility solution is a first for the automotive industry.

All the mobility services will be accessed by the custom developed App through which all bookings and payment will be made. Services will also be able to be booked online or via a hotline to cater for people who do not have a smartphone.

Some US $20-million (R246-million) will be spent in Rwanda by VWSA during phase one of the integrated automotive mobility solutions.

“We are delighted with the progress that has been made since we signed the MOU with Volkswagen in 2016. We are ready to partner with Volkswagen as they implement their integrated automotive mobility solutions as well as vehicle assembly operation in Rwanda.

“Our country is determined to become the leading innovator in Africa.  This project is in line with Rwanda’s policies to protect the environment, create jobs, and reduce our trade deficit. We are confident that this partnership will help create countless opportunities for young Rwandans not only in terms of employment but also in terms of skills transfer,” says Clare Akamanzi, CEO of the RDB.

Slight improvement

For the first time in four years total vehicle sales in South Africa for the year have gone up with 2017 showing a 1,8% percent improvement over 2016.

The new vehicle industry ended 2017 on a positive note, according to the annual sales data from the National Association of Automobile Manufacturers of South Africa (Naamsa).  Despite December 2017’s year-on-year sales declining 2,4%, the year-to-date new car sales for 2017 still grew 1,8%. In total, 557 586 new vehicles were sold in South Africa during 2017.

“The new vehicle market’s positive performance for the last year was almost exactly in line with our forecast of 1.74% growth,” says Rudolf Mahoney, Head of Brand and Communications, WesBank. “This can be attributed to the Rand being resilient in the face of volatility and the South African economy performing better than anticipated. However, the economy is still underperforming and faces a long road to recovery.”

In the second half of 2017, OEMs were able to stave off price increases as the Rand firmed against foreign currencies. This allowed manufacturers to pass value back to consumers through very attractive marketing incentives when purchasing new vehicles.

WesBank’s data for 2017 also reflected the continued shift back to the new vehicle market, especially when measuring demand through the number of vehicle finance applications received. Demand for new vehicles rose 6,4% in December, while demand for used vehicles slowed 0,2%. Overall, demand for new vehicles grew 3% in 2017, while demand for used vehicles declined 1,5%.

Since the introduction of the Polo and Polo Vivo in 2010, Volkswagen Group South Africa (VWSA) has been passenger market leader every year. The Volkswagen Group ended the year with 80 308  sales giving VWSA a total market share of 21,8%, with the Volkswagen brand achieving 18,9% share in a run out year of its volume models.

“The Polo Vivo and Polo remained the first and second best-selling passenger cars in 2017, which is also for the seventh consecutive year – this is an incredible achievement for the Volkswagen brand considering that we effectively ran out of supply in December of the key models which is illustrated by the unusually low 14,8% market share we achieved in December,” says VWSA Chairman and Managing Director Thomas Schaefer.

“I am delighted by the performance of both the Volkswagen and Audi brands in 2017 and know that we will do even better in 2018”,

Volkswagen will be launching the new Polo later this month which will be followed by the Polo Vivo still in this quarter.

According to Naamsa, export sales recorded a decline in December, 2017 and at 17 374 units reflected a fall of 1 333 vehicles or 7,1% compared to the 18 707 vehicles exported during December, 2016.  This was largely attributable to the effect of model run out and new model introduction of the new VW Polo range in 2018.

Annual aggregate annual industry sales by sector, since 2014, were as follows –

 

Sector

 

2014 2015 2016 2017 2017 / 2016

% Change

Cars 438 938 412 478 361 264 368 068 +1.9%
Light Commercials 173 492 174 701 159 283 163 346 +2.6%
Medium Commercials 10 780 10 394 8 315 7 785 -6.4%
Heavy Trucks,  Buses 20 534 20 075 18 685 18 387 -1.6%
Total Vehicles 643 744 617 648 547 547 557 586 1.8%

Source:  Lightstone Auto, NAAMSA

Whilst the modest improvement was welcome, the figures should be seen in the context of industry sales 11 years ago when the domestic market recorded an all-time high sales number of 714 314 units of which the new car market had represented 481 558 vehicles.

2017 Vehicle exports represented the third highest annual Industry export figure on record and total vehicle exports at 329 053 units were down on the 344 820 vehicles exported in 2016 – a decline of 15 767 units or a fall of 4,6%.

2017 Industry export sales data, compared to previous years, were as follows –

  2015 2016 2017 2017 / 2016

% Change

Cars 229 723 238 547 221 928 -7.0%
Light Commercials 103 000 105 219 106 126 +0.9%
Trucks & Buses 1 124 1 054 999 -5.2%
Total Exports 333 847 344 820 329 053 -4.6%

Source:  Lightstone Auto, NAAMSA

South African financial markets have reacted positively to the outcome of the December, 2017 ANC elective conference.  However, economic and fiscal policy uncertainty, political challenges, the risk of further credit rating downgrades and increasing geo-political tensions make forecasting difficult.

On the positive side, several recent economic indicators support the view the South African economy is performing better than anticipated despite low levels of business and consumer confidence.  Barring a further credit rating downgrade, an improvement in economic growth from about 1,0% in 2017 to around 1,9% in 2018 remains possible and this would lend support to new vehicle sales in the domestic market.

The substantial improvement in the Reserve Bank’s leading indicator of economic activity heralds improved economic prospects. Also on an encouraging note, the positive global economic environment – with International Monetary Fund projections of 3,7% global expansion – will lend support to industry export sales.

Faster economic growth remains an imperative to address South Africa’s socio-economic challenges and to take pressure off strained public finances and overburdened taxpayers.  In this context, concerted steps are needed by Business, Government and Labour to create a more investor-friendly environment as a means of boosting growth.

NAAMSA anticipates further modest improvement in domestic new vehicle sales during 2018 as well as further growth in vehicle exports and industry production numbers.

The outlook for 2018 in terms of Industry domestic vehicle sales by sector

 

Sector

 

2015 2016 2017 2018 Projected
Cars 412 478 361 264 368 068 375 000
Light Commercials 174 701 159 283 163 346 170 000
Medium Commercials 10 394 8 315 7 785 8 000
Heavy, Extra Heavy, Commercials, Buses 20 075 18 685 18 387 19 000
Total Vehicles 617 648 547 547 557 586 572 000

 

 

Fleet insurance contains costs

Cost containment is a priority among fleet owners faced with uncertainty over fuel prices, an economy in recession and rising costs.

With careful management and attention to detail fleet insurance can both reduce insurance costs and enhance the safety of employees and still benefit the fleet operator with as much coverage as is required.   It can also make a significant contribution towards road safety.

Fleet insurance covers a group of cars, commercial vehicles and trucks under one policy.  It is designed to distribute the risk across the board so that a fleet operator pays only once for each peril, rather than insuring each vehicle individually, thereby paying for each vehicle’s risk.   It assesses the risk and evaluates the premiums based on the challenges for the entire fleet.

“Fleet operators have unique needs” says Murray Price, managing director of Eqstra Fleet Management.  “The insurance must take into account the complexities of insuring business vehicles, such as insuring for multiple drivers and making sure vehicles can be used for as many applications as necessary.

“It is important to consult with the right insurer to ensure the business gets the optimum level of vehicle cover.   The insurer must understand the operational demands of the fleet, particularly if it is operating a number of heavy-duty trucks and commercial vehicles.”

Calculating commercial fleet insurance costs

Although every fleet operator will have unique needs, there are some basic factors that every company will take into consideration when calculating fleet insurance costs.   These include:

  • The number of vehicles to be insured and what vehicle type.
  • Vehicle age and condition.
  • Estimated kilometres.
  • Claims history.
  • Vehicle telematics solutions.
  • Driver behaviour history.
  • Book value of each vehicle covered.
  • Routes – eg urban versus rural etc.

To qualify for fleet insurance, the vehicles must be owned by the same business/person.  The insurer usually requires a minimum number of vehicles in order for the insured to qualify for fleet insurance.   It remains the duty of the fleet owner to keep the insurance company informed of any changes to the fleet.

Benefits of Fleet insurance

  • Fleet insurance covers all vehicles owned by the business and ensures each vehicle is outlined in the policy.    This greatly simplifies claims administration.
  • Drivers who struggle with individual insurance will be covered under a fleet insurance policy.   This will assist them should they wish to obtain individual insurance at a later time.
  • Costs – companies who provide fleet insurance must still take into account the driver’s past history and experience, but fleet insurance costs are much less than purchasing individual insurance.

What to look for in fleet insurance

Fleet insurance premiums should be based specifically on the risk profile of the business.  It is essential to investigate the following when choosing a fleet insurance company:

  • The ability of the insurer to administer the claims processes effectively and quickly
  • Availability of emergency roadside assistance – 24 hours a day, 7 days a week
  • Cover for reasonable storage costs or towing to the nearest repairer
  • Approved repairers that the insurer deals with
  • Cover for the costs incurred for the removal of the wreckage as well as costs for   replacing locks, keys, remote controls or the reprogramming of vehicle security systems
  • Cover if needed outside the borders of South Africa
  • Cover not only for the vehicles but also for accessories and spare parts
  • Legal liability insurance cover for damage to property of other parties as a result of a vehicle accident.

“Remember, as fleet managers and logistic companies seek for affordable commercial vehicle fleet insurance, road safety is the ultimate beneficiary,” concludes Price.  “Affordable fleet insurance depends on safer driving behaviour and the ability to accurately measure such driving.   Fleet insurance rewards safer driving which in turn assists in reducing accidents and improving road safety.”