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As we near the last weeks of 2023, it prompts us to reflect on the economic challenges facing South Africans. Amid prevailing uncertainties, recent sports triumphs have instilled a sense of pride and unity, and the latest positive employment data all offers a glimmer of positivity in tough times.
Our nation is undeniably navigating economic perils that impact us all. High unemployment, escalating inflation, and an overall air of uncertainty pose challenges for households and affect consumer spending. Amid these economic realities, it’s crucial to acknowledge the resilience of NADA members.
Dealerships, despite economic headwinds, stand as resilient pillars in their communities. Adapting to the changing landscape, dealers have demonstrated remarkable strength in the face of testing economic times. The automotive industry, while acknowledging hurdles, continues to provide essential services, contributing significantly to our nation’s economic fabric.
The Springboks winning their 4th World Rugby Cup, have acted as a unifying force, reminding us of our collective strength, offering a welcome respite from daily challenges. Celebrating these accomplishments, it’s vital to leverage this unity to collectively navigate the highs and lows of operating a business in our country and industry.
Within the automotive industry, the landscape may be shifting, but dealerships remain at the forefront of economic activity. Analysing current conditions, despite a challenging domestic backdrop, dealerships continue to adapt and serve their communities. The resilience displayed by dealers is a testament to their commitment to weathering economic uncertainties.
The automotive industry is undergoing a transformative shift toward Environmental, Social, and Governance (ESG) principles. This shift, addressing societal and environmental concerns, also presents growth opportunities within dealerships. Diverse career paths, coupled with the industry’s commitment to innovation, position dealerships as contributors to economic recovery.
As we celebrate sports triumphs and acknowledge economic realities, let us draw strength from our collective resilience. Together, we can navigate the currents of change, finding optimism in shared victories and the enduring commitment of our dealerships to the prosperity of our nation.
We trust that you are enjoying the newsletters and look forward to continuing to share relevant content with you. Please feel free to share your feedback with us, submit content and provide suggestions as to how we can improve the content we share with you.
Sincerely,
Brandon Cohen
National Chairperson
NADA
Mixed messages from vehicle sales … but consumers know what body shapes they want
In this issue of Lightstone’s Auto Insights we see that while September fell short of expectations, new vehicle sales in 2023 are ahead of 2019 volumes, indicating that the market is running slightly ahead of pre-Covid levels. But while the market battles tough economic conditions, consumers are making it clear which body shapes they want. Lightstone has given its LIVE mobile APP a makeover and we congratulate Lightstone’s Star Reacher Quarter 2 winners.
VTA’s accredited vehicle testing stations set the standard for excellence
The Vehicle Testing Association (VTA), formerly known as NVTA, is an esteemed association and member of the RMI, representing private vehicle testing stations dedicated to ensuring roadworthy certifications in compliance with the National Road Traffic Act and SABS 10047.
Our commitment to excellence is underscored by a rigorous accreditation programme that ensures our members meet the highest standards set by the VTA, RMI, and in accordance with SANS 10216. With several Vehicle Testing Stations across the nation, VTA offers a diverse range of exceptional services in the vehicle testing arena.
Implementation of the South African Traveller Management System at land borders
The South African Revenue Service (SARS) commenced with the implementation of the South African Traveller Management System at all South African ports of entry in 2022 as part of the broader Customs Modernisation and SMART Border Programmes.
The implementation of the SATMS, which is a web-based system that enables travellers entering and leaving the country to pre-declare goods purchased, received or otherwise acquired and pay applicable taxes, also provides a modernised alternative to the current manual process where travellers complete a traveller card (TC01) at a border post, thus safeguarding the security of travellers’ data and limiting the undesirable impact to the cost of doing business.
Ford Celebrates 100 Years in South Africa
Ford Motor Company is celebrating its proud 100-year legacy in South Africa with the announcement of a R5.2 billion (US$272 million) investment in its local operations for production of the first-ever Ford Ranger Plug-in Hybrid Electric Vehicle (PHEV).
The motor industry is a key contributor to South Africa’s GDP, and can play a role in enabling our country and our continent to realise its full potential
In a country with limited public transport options, transport poverty aggravates financial poverty, as people need to have access to transport to become and be economically active, whether they’re going somewhere to work, or they’re involved in goods being collected or delivered.
The statistics are stark: South Africa has the highest GINI coefficient (a measurement of inequality) in the world[1],
highlighting extreme inequality, nearly 19 million people live in such poverty that they depend on government grants[2], and 32.6% of our total population is unemployed. A further 10 million people[3] need the R350 social distress grant to survive, and our national food poverty line – the amount of money needed to pay for the minimum amount of food needed to survive – is now R760 per month, up R100 from just one year ago.
Even among those South Africans who are more formally economically active, our data at TransUnion[4] shows that 62% of the average South African’s household income goes to servicing debt.
As South Africans, we’re constantly challenged to find ways to do things differently – and finding new ways to promote and enable the transport mobility that will enable economic mobility across our whole population is certainly a challenge we could and should all rise to.
Let’s start with the between 2.4 and 3.5 million[5] small, medium, and micro-enterprises (SMMEs), which employ as many as 60% of the country’s workforce[6]. Of those, an estimated 63%[7]
are considered informal, with one third creating between one and ten jobs each. By 2020, SMMEs had grown to contributing 40% of the country’s gross value-added (which is equal to GDP before taxes and subsidies. It’s these SMMEs that deserve renewed focus for encouragement, innovation, and support as they hold the potential to turn South Africa’s economy around: they create employment, which in turn creates demand in the economy.
Just because these businesses are small doesn’t mean that they don’t need transport solutions, whether it’s to deliver buckets of vetkoek to streetside vendors or to collect fresh produce from the market. However, there’s little data available about these potential customers, which means that there’s little data for credit bureaus to share with lenders to enable them to assess potential risk.
Because it’s one of our goals to expand financial inclusion, we’ve started including non-financial data in our scoring solutions that help us better understand consumers and businesses, such as how regularly a small business owner purchases mobile phone data or pays their mobile bill.
Regular, predictable purchase patterns reveal a regular income, and an ongoing business turnover, which helps boost the data the bureau holds on them, along with their credit profile and their appeal to lenders.
Having a deeper insight into these businesses and individuals and assessing them differently to how larger industry players are measured, means that lenders can believe that they’re worthy of finance. However, it’s also up to lenders and vehicle OEMs to learn more about and listen to a wider group of potential buyers, and to create solutions that make alternative transport methods more accessible, and more efficient.
For example, I’m inspired by Rush, the courier aggregation service that expanded its services during the pandemic to ensure that courier companies used all the capacity in their tracks, increasing profitability.
The proliferation of grocery delivery apps has highlighted just how business can be taken to consumers via the power of mobile payments.
Despite the complexities around the climate into which they were launched, the Bajaj Qute vehicles introduced by ride-hailer Bolt have expanded access to earning opportunities and vehicle ownership to more people.
What these creative solutions – and so many others – show us is that consumers care about the value they can derive, they don’t care about the process it takes to deliver that value. The entire ecosystem of distribution has changed in the SMME sector, and the automotive industry has an essential role to play in maximising opportunities for potential, new, and existing customers.
While our unemployment statistics are heartbreaking, our country’s unemployed people are also our future customers, businesses, and workers and as they benefit from the economic growth made possible by mobility, they will in time become the industry’s customers.
The pathway to financial inclusion is no longer binary – we need to meet potential customers halfway and help our customers and fellow citizens create the future we all want. We can do that by including non-traditional data in how we assess risk, giving the auto industry the opportunity to trigger more job creation by engaging more innovatively with potential customers and business solutions it has not previously considered.
By Lee Naik, CEO of TransUnion Africa
[1] Gini Coefficient by Country 2023 (worldpopulationreview.com)
[2]SA now has 19 million people on social grants, costing taxpayers over R200 billion | News24
[4] Credit Check, Credit Report & Credit Score | TransUnion South Africa
[5] Freeing small businesses | SONA 2023 (stateofthenation.gov.za)
[6] Why South Africa needs more small businesses – Business Partners Limited (bizcommunity.com)
