Retail Motor Industry Organisation (RMI) CEO Jeff Osborne warns that South Africans should not wait too long before they “start thinking of buying a new car”.

He notes that the RMI, representing 14 sectors in the local automotive industry, believes new-vehicle sales will rise by 8% in 2013 over 2012. The market grew 9.2% in 2012 over 2011.

The top-selling passenger car in 2012 was the Volkswagen Polo Vivo, with the top export model the Toyota Hilux pick-up. The ever-growing Hyundai was South Africa’s third-biggest passenger-car brand, at 47 414 units, with Volkswagen and Toyota in first and second place respectively.

“[The year 2013] could be a year of two halves, with price rises having a greater impact in the second half of the year,” notes Osborne. “So, seize the opportunity – it is an excellent time to buy a vehicle. There is robust competition and [there are] extraordinary offers, particularly for first-time buyers.”

He does not want to quantify the price increases he expects for 2013, noting only that much of it will be driven by a weakening rand.

Rising new-car prices will also lead to an improved used car market, says Osborne, as the current marginal price gap between new and used is likely to grow, making used cars a more lucrative buy for many consumers.

Osborne says growth in the 2012 new- car market will be driven by low interest rates, a “huge choice in models”, an emerging middle class, and movement in the replacement cycle.

“Many people are driving three- or four-year-old vehicles with enough residual value to enable them to do a trade-in deal for a brand-new vehicle.”

Looking ahead to the new year, Osborne regards the implementation of e-tolls as a “big threat” to affordable motoring, while scheduled wage negotiations, following the end of a multiyear wage agreement, could see some turmoil in the automotive industry later this year.

Write-Offs at Historical High
Vehicle write-offs following accidents were at a historical high in South Africa, said Osborne last week, with the cost of manufacturers’ parts often viewed as too high for a vehicle to be repaired.

“I am deeply concerned at the cost of warranty spare parts. In some cases, this inflates the cost of repair so much that a vehicle is written off. This can lead to vehicles being scrapped too easily, with repair shops losing out on business.”

Osborne says there is a push from vehicle insurers to reduce the cost of vehicle colli-sion repair, and to drive down the number of vehicle write-offs.

He says the insurance industry is investi-gating the use of nonoriginal parts on vehicles that ware out of warranty, in an attempt to “save the vehicle”.

He adds that the RMI is “calling for dialogue with manufacturers to redress this [trend], as the overall affordability of owning/running a vehicle is a key consumer concern”.

Periodic Vehicle Testing
Periodic vehicle testing, where any vehicle ten years and older is tested to determine its roadworthiness at five-year intervals, did not come to fruition in December 2012, as the RMI had hoped would happen, says Osborne.

While he acknowledges that this will be good business for the RMI and its members, he also believes that such a testing regime will help to curb the number of accidents on South Africa’s roads.

Osborne says the Department of Transport does not provide any reason for postponing the system’s implementation, or any alternative date for its roll-out.

“We are frustrated. It is way overdue and should be rolled out quickly,” notes Osborne.