April 2023 | BUSINESS FLEET AFRICA
WWW.BUSINESSFLEETAFRICA.CO.ZA
Editor
Reuben van Niekerk
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082 837 8801
Editor-at-large
Suzanne Walker
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Contributors
Roger Houghton
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Jacques Wilken
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Supplement Editor
Tristan Wiggill
Tristan@businessfleetafrica.co.za
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Charlene Kruger
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Adapt or die
The transport sector defied expectations of under-performance
in the fourth quarter of 2022 to be the best sectoral performer,
admittedly amongst multiple laggards. The negative impact of
the prolonged Transnet strike had depressed the transport sector’s contribution, with the
sector growing by only 0.7% on a quarterly seasonally adjusted basis compared to growth
of 3.6% in the third quarter. However, given that the overall economic performance was
worse, with real GDP contracting by 1.3% on a quarterly seasonally adjusted basis, the
transport, storage and communication sub-sectors were the star performers. This talks to
the resilience and diversity of the sector, despite multiple headwinds.
At the end of March the South African Reserve Bank announced a further 50 basis
points hike in the repo rate, the second increase for the year and one which sees the repo
rate increase to 7.75% while the current prime lending rate shifts to 11.25%, the highest it
has been since 2009.
The ongoing challenges of harsh load shedding, high cost of living, high production
costs due to high fuel prices, rising wage demands and elevated interest rates, all contrib-
uted to the country’s dismal economic performance in the fourth quarter of 2022. With
little indication of a notably different economic environment in 2023, but rather even
lower economic growth forecasted for 2023 compared to 2022, the economic environ-
ment is expected to remain dismal and challenging.
This performance by businesses that form part of the automotive industry is re-
markable and shows just how resilient the industry has been. But for how long can this
continue? Surely at some stage something has to give?
Vehicle industry experts warn that vehicle pricing might be in for a tough time. While
stock levels have normalised factors such as the exchange rate has resulted in substantial
new vehicle price increases. In addition, the effects of low stock volumes during the
COVID-19 period could soon be felt in the pre-owned market. With low sales numbers in
2020 there is now no one to two-year-old stock available in the pre-owned market and
buyers who traditionally shopped in that market now need to look elsewhere, either at
more affordable new vehicles or older pre-owned vehicles as the stretch to a new model in
their traditional segment is simply too much for already pressured budgets.
The industry is going to have to seriously consider innovative financing options such as
plans that allows fleets to acquire the vehicles they require without the burden of tradi-
tional finance to own repayment agreements. I suspect the current market might force an
accelerated move to the popularisation of leasing models.
This all sounds like a serious disruption for the automotive industry but as always, I
suspect that the industry will display resilience and reward those that are innovative in
their offering.
As always we bring you a wide variety of interesting news from the world of working
wheels in this months edition of Business Fleet Africa, including interviews with representa-
tives from Pargo and Volvo Trucks, both of which are currently innovating in different ways
to ensure that their businesses remain relevant in a changing environment.
Reuben van Niekerk
Editor
Editorial
EDITORIAL
WWW.BUSINESSFLEETAFRICA.CO.ZA
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To kick start 2023, we at Business Fleet Africa will be rewarding one lucky reader with a R10 000 prize.
Each month (From the February 2023 issue) there will be a set of questions, the answers to which
can be found on the pages of that issue of Business Fleet Africa. Each month, up until the July issue,
you can enter as many times as you like. The winner will be drawn randomly on the 31st of July 2023.
To view the third round of questions, enter and for the Terms & Conditions of this competition
please click on the link above.
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