Monthly Archives: November 2002

South Africa’s in great shape … and so say all of us!

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Nov 2002

Alive with possibilities! That’s the slogan that South Africa’s Marketing Council believes encapsulates the spirit of this country. Captains of industry and Minister of Trade and Industry, Alec Erwin, are in total agreement.

Speaking at the opening of Auto Africa 2002, NAAMSA chairman Ian Robertson, was superlative in his praise of the current shape of SA’s automotive industry across-the-board. “At the start of 2002, there was much doom and gloom with predictions of a drop in vehicle sales exacerbated by price and interest rate hikes and the continuing decline in the value of the Rand.

“Good news in the heavy commercial vehicle sector is that sales are up 15% on last year’s figures,” he said. “The HCV sector provides a good gauge on how the overall economy is performing.

“With exports valued at R40-billion overall going to countries like the USA, Japan, UK, Australia and New Zealand – all with highly demanding consumers and markets with expectations of world class standards – we are experiencing an export boom.”

According to Alec Erwin, SA’s motor industry has not nearly reached its full potential. “When the MIDP started in 1993, many felt it was a crisis moment – would we just end up importing vehicles in the future?

“But as we’ve become part of the global economy, we’ve progressed in the manufacturing process and benchmark well with our global peers” he countered. “At the DTI, we believe that South Africa will become a major manufacturing economy within the next five to 10 years.”

Speaking at SAVRALA’s Manufacturer of the Year Awards 2002, CEO of McCarthy Motor Holdings, Brand Pretorius said: “While there are some formidable negatives to overcome -unemployment, the impact of HIV/AIDS and a currency that has depreciated by an average of 12% per annum over the last 20 years – there are also many positives including political stability and quality leadership.

“The quality of SA’s money and fiscal management is outstanding and this is the ninth consecutive year of economic growth. Last year was the first since 1980 that SA’s growth and GDP exceeded the world average.”

“Today, South Africa is a respected member of the global community and our motor industry is proof of that,” continued Pretorius. “In 1995, we exported just over 7 000 vehicles. In 2002, the figure is 130 000 vehicles.”

SAVRALA president, John Broadway, echoes the positive sentiments of both Robertson and Pretorius. “The consistent application by Government of sound policies in all spheres of South African life in recent years has created a good platform for business. For our members in the rental and fleet management industries, there is real optimism for 2003 and beyond, with many exciting opportunities ahead.”

“The new South Africa is not an event,” said Pretorius, “it is a process that will take much time and energy to create that miracle we were all hoping for.” Quoting an old Chinese proverb, “better to light a candle than curse the darkness,” he concluded: “Let’s go out there and face the future with confidence and determination – let’s do our best to light a few candles in 2003!”

And so say all of us …

Outlook for Fleet Management in SA

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Nov 2002

For novices harbouring notions of careers in fleet management – as well as for the greybeards in the game – in this article, a spokesman for SAVRALA puts fleet management (FM) in perspective and describes the market forces impacting on the industry.

When talking fleet management, outsourcing is top of mind. Whether it’s IT, HR, logistics – or fleet management for that matter – increasingly, companies are realising the benefits to be derived from selectively apportioning facets of their non-core business to specialist enterprises.

Specialist FM companies provide a gamut of professional services. With the key elements being cost control, administrative efficiency and risk management, they are able to oversee and control the life cycle management of a single vehicle or fleet of vehicles from cradle to grave.

The services on offer may range from the design of a company’s car or car allowance policy, to the sourcing and buying of motor vehicles, maintenance, management of fuel, tyres, insurance and accidents, right through to the eventual disposal of the vehicle/s at the end of the agreed lease period.

Fleet management is a somewhat loosely used term and clients are sometimes confused by the spread of services available from banking institutions compared to specialist companies. In broad terms, a key objective of banks is to lend money and grow their asset book. To that, is added an enhanced range of sophisticated fleet services such as fuel management.

The key objective of specialist FM companies is to manage costs and risk on their client’s behalf. Financing is a consequence of their being in business, not a cause. In fact, current statistics reveal that in the corporate FM sector – which totals just under 100 000 vehicles managed by both banks and specialist companies – the split between financed and non-financed vehicle management contracts is about equal.

In recent times, the corporate sector FM business has not experienced exceptional growth. In part, this is a reflection of the general state of the economy, clearly indicated in NAAMSA’s new vehicle sales figures.

In the medium-term, several factors will continue to influence the industry’s shape and size. These include:

  • The continued growth in government outsourcing its fleet management. Tenders using different precedents have been implemented with varying degrees of success. While not all FM companies are operating in this sector, government business is a reality and here to stay. In time, more FM companies will undoubtedly develop the right solution for government and parastatals,
  • The continued impact of car allowance schemes. The buying and management of cars has been removed from corporate hands and placed in private buyers’ hands. This continues to negatively impact on fleet opportunities,
  • The trend by motor manufacturers to incorporate maintenance plans on new vehicles at point-of-sale is increasing. Undoubtedly, in the next year or two, more motor OEMs will build in plans – management and/or service – into their vehicles from scratch which will influence the ability and need to manage fleet costs,
  • In the absence of other investment opportunities, some corporates are finding it more effective to avoid debt by paying cash for their cars. The result is more vehicles managed in-house with the potential risk that inexperienced in-house fleet personnel may be inattentive to key issues such as cost controls, risk management and overall fleet efficiency.

    The challenge for the players in the FM industry is to continue to maintain professional standards in the provision of their services and to try to grow the proportion of the national corporate park that they collectively manage above the current 10%. There is certainly plenty of opportunity.

If you have not considered using the services of a specialist fleet manager, why not arrange an appointment with a member of SAVRALA to gain an understanding of the cost, efficiency and risk management benefits that they are able to provide. Please click here for details of all current members.