The SA motoring industry really, really matters.
Statistics presented at the NAAMSA Automotive Conference at the SA Festival of Motoring on 31 August showed that the industry contributes 7.7% of SA’s GDP, which is more than our iconic mining sector.
The motoring industry also accounts for 14% of all exports with 600,000 vehicles made locally in 2017 for foreign markets at a value of R165bn.
And our domestic market remains a heavyweight with 564,000 new vehicles purchased here last year which is 45% of sales for the entire African continent. (The next biggest African market is Egypt with one-third of our new vehicle sales.) If you add our vibrant second-hand vehicle market, which runs at more than double the volume of new vehicle sales, you have at least 1.7m vehicle transactions within SA in 2017 which represents a very significant, and, I believe, under-estimated force in our economy.
That’s the current situation but much of this important conference was taken up with visionary talk of the future. The SA-born, former head of the Cadillac luxury car division in the USA, Johan de Nysschen, captured the sentiment when he said: "there’ll be more technological development in the motor industry over the next five years than in the last 100 years".
There was a lot of discussion around artificial intelligence, augmented reality, 4D vision sensors, driverless cars, the trend away from car ownership towards ride-hailing, electric vehicles, and autos as entertainment venues and media markets.
All of which is seductive but probably distracting for our market.
Even in the first world, a lot of these trends are taking far longer than originally predicted to gain any kind of critical mass. They are undeniably happening but slower than anticipated and well behind some of the big talk of achieving major goals in the 2020’s. No one has yet achieved a satisfactory legislative framework for Uber let alone driverless cars. And there’s not a single market where electric vehicles are outselling petrol-driven - in fact only Norway at 39% is even close, the next best is Iceland at 14% and then Sweden at 5%. There’s also likely to be even more resistance in our long-distance environment (and those of the markets we export to) where such vehicles are both unproven and very dependent on a nationwide charging infrastructure.
Even the widely-demonised diesel engines continue to sell well internationally.
There’s also some good research on how, what are labelled as, Afrillennials are different from Millennials in some other markets in still desiring vehicle ownership as both an indicator of success and a practical essential. They will use ride-hailing services, if they’re available, but still want their own car.
In truth, I believe our vehicle market in ten years’ time will look remarkable similar to how it does now – bakkies & hatchbacks will still dominate –but fuel economy will become an increasingly important issue. Unless there’s a miraculous uplift in the rand or an equally miraculous downshift in the oil price, the R2000 tank of petrol may not be far away. Not so long ago, you could buy a good car on Gumtree for that!
By Jeff Osborne, Gumtree SA Head of Automotive