R/€ = 15.26Change: -0.01
R/$ = 14.44Change: -0.06
Au 1063.37 $/ozChange: 5.49
Pt 830.50 $/ozChange: -5.00
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?

And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters About Us
RSS Feed
Article   Comments   Other News   Research   Magazine  
Mar 12, 2004

New tax structure beneficial to automotive sector

© Reuse this One of South Africa’s eight vehicle manufacturers, Fiat Auto South Africa, reports that, the current interest rate, coupled with the new tax structures, has created good consumer confidence in the local automotive industry.

“The low interest rate, coupled with the tax structures presented in Trevor Manuel’s budget speech, has created good consumer confidence and resultant demand in the South African automotive sector.

“Moreover, the full effect of reduced interest rates has yet to be felt.

“We anticipate that this effect will take place between the second, third and fourth quarters,” MD Gorgio Gorelli tells Engineering News.

He adds that the market is excited about the low interest rates, and that families will start reshaping their budgets accordingly, since they will be able to buy products they were previously unable to buy. Therefore, the monetory policy, which targets a stable and reliable rand, should benefit the South African automotive sector.

Other factors affecting the local automotive sector are the Motor Industry Development Programme (MIDP) and the volatile rand.

“The MIDP is a wise programme; in fact, it is one of the best programmes in the South African motor industry.

“However, there is still difficulty in its understanding and application, especially with the excessive formality and bureaucracy in the operating side of the programme.

“The programme has to be regulated properly according to the market vision, which is not yet common wisdom,” says Gorelli.

He adds that programmes such as the MIDP, which attempts to incentivise the motor industry, have been working well in China, India and Brazil, due to the fact that the programmes are seen as stable investments and engines for economic growth.

The challenge with the MIDP in South Africa is the current state of the rand. “A volatile currency is dangerous.

“And, in terms of the MIDP, if the currency is not controlled, the country could lose export orders,” says Gorelli.

He adds that the company’s manufacturing volumes have decreased from 9 100 vehicles in 2002 to 7 100 vehicles last year.

This decrease is the result of the halt in production of the Fiat Uno for six months due to global stock of material and the adoption of a new business model. However, production of the Uno has since continued, due to demand for the vehicle. Gorelli adds that the company will be unable to maintain the production of the Uno range, as it is part of Fiat’s rationalisation of the product range.

Production of the range is scheduled to end in July.

Gorelli is confident that this will not result in a further decrease in volumes, as other models, such as the Palio and Siena, will compensate for the loss in volumes of the Uno.

The other reason for the decrease in volumes is the dramatic turnaround in the company’s business model, which involves selling vehicles according to customer demand, rather than from stock.

“Our new business model revolves around building custom-made cars to clients’ needs, rather than holding vehicles in stock.

“This model aims to achieve greater customer satisfaction, and avoids possible logistical damage while goods are in stock,” says Gorelli.

He adds that the company has fewer than 200 locally-produced vehicles in stock.

Gorelli says that much excitement lies ahead for Fiat in terms of new models in the next two years, following the success of the Palio range last year.

“The Fiat Palio range has been in high demand, as it is one of the most affordable cars in the South African market.

“The Palio special series, which was launched as a made-to-order car, has been an outstanding success to date, and we anticipate further success with the Palio diesel, to be launched in mid-November.

“We are also proud to announce that the Palio special series now includes blue-tooth technology as standard equipment.

“The blue-tooth technology meets customer demand, due to the fact that cellular phones have become an office tool while on the road.

“This series will enable owners to drive safely while using the mobile office,” Gorelli notes.

He adds that the Palio diesel will make its debut at the Auto Africa exhibition, in October.

Fiat is also set to launch its new Punto model in South Africa in July.

According to Gorelli, this model, which is currently the vehicle leader in European markets, is expected to play a key role in the medium-sized vehicle segment.

Moreover, plans are under way for Fiat to start producing a commercial vehicle next year.

South Africa will be the global poll for this right-hand drive model.

Gorelli adds that the company’s current production capacity is 15 000 units a year.

However, it is producing much fewer than that.

“In April, 2002, we produced 26 units a day and in October, 36 units, which increased to 42 units a day in January last year.

“We are hoping to increase production to 50 units a day, as the back-orders are currently extending to the end of April,” says Gorelli.

He adds that the company is adamant about improving production, especially with the quality levels it has achieved.

According to Gorelli, the company’s main challenge is back-orders.

To cope with this problem, Fiat has decided to implement a new order system that gives the customer priority. “We have eight information technology (IT) specialists from Europe implementing the new IT system,” Gorelli explains.

He adds that this system will be beneficial to customers and dealers as it will reduce waiting time for vehicles significantly.

Moreover, the first phase of the system has been implemented, with the financial phase scheduled for April and operation in June.

Fiat intends to have the system fully operational by the Auto Africa exhibition. Another challenge is to grow the South African automotive industry.

“The local automotive industry has been stable for 30 years, and in the last 20 years, the number of dealers doubled and brands tripled.

“South Africa currently has a stable economy, and investment from abroad is improving.

“This is the right time to start the positive phase for the local automotive industry,” says Gorelli.

In terms of the future, he adds that the company will focus on finding new export markets throughout the Southern Hemisphere.

Another goal for the future is to increase the company’s 3% market-share in South Africa.

“There is room for improving our current market share.

“We are confident that, with the new models and diesel alternatives, we can increase our market share considerably,” Gorelli notes.
Edited by: zeena isaacs
© Reuse this Comment Guidelines (150 word limit)
Other Automotive Industry News
Paperboard and corrugated pallet manufacturer Kimmo, which previously traded as CX Pallets, manufactures honeycomb paperboard, an extremely thick and sturdy material for use in protective transport packaging. Having invested in state-of-the-art honeycomb paperboard...
AEROVANTAGE HYBRID BLADE Champion’s new wiper blades were launched globally this year and are specific to vehicle applications
Champion’s new wiper blades were launched globally this year and are specific to vehicle applications. Champion has been persistent in developing this product and hopes to be the first company to market wiper blades with this new technology. Meanwhile, global...
FOCUSED ON SAFETY A safe, rearward-facing seating position enables a child to keep eye contact with either the driver or the rear passenger
With the launch of a new child seat concept, Swedish vehicle manufacturer Volvo Cars’ design team has completely reimagined how children can travel safely in the future.
Latest News
Updated 1 hour 38 minutes ago The tide has turned for South African ports and the Transnet National Ports Authority (TNPA) is pressing ahead with its investment under Transnet’s Market Demand Strategy (MDS) notwithstanding poor economic growth. TNPA CEO Richard Vallihu told a TPA...
Updated 2 hours 8 minutes ago A 7 500 m2 rooftop solar system has been installed on several buildings at the V&A Waterfront, in Cape Town. The powering of several buildings on the iconic property will result in an estimated 1 640 000 kWh/y of clean energy. So far, 900 kW have been successfully...
Updated 2 hours 21 minutes ago The 865 km gas pipeline from the central processing facility (CPF) in Temane, Mozambique, to Secunda, South Africa, is to undergo a further $210-million expansion, the Republic of Mozambique Pipeline Investments Company (Rompco) confirmed on Monday. Rompco is a joint...
Recent Research Reports
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
This Week's Magazine
The BMW Group will invest R6-billion at BMW Group South Africa’s (BMW SA’s) Rosslyn plant to produce the next-generation X3 sports-activity vehicle (SAV) for the local and export markets. Rosslyn will continue production of the current 3 Series through its lifecycle,...
The lack of consequences for poor performance and transgressions on the part of contractors remains a significant hurdle to tackling South Africa’s service delivery challenges, delegates heard at the Consulting Engineers South Africa Infrastructure Indaba, on...
City of Ekurhuleni executive mayor Mondli Gungubele earlier this month officially named the city’s bus rapid transit (BRT) system, Harambee.
NICK CHRISTODOULOU As about 58% of data stored by organisations is dark, they must identify this dark data to expose risks and valuable information
About 58% of unstructured data stored by companies is dark data, which means that the value or regulatory importance of the data has not been determined. Subsequently, most of the stored data add costs, rather than increasing revenue or reduce regulatory risks, says...
BRIAN VERWEY Effective management, review and administration of non-core elements can improve business operations and increase revenue and decrease unforeseen risks
Effective logistics, import/export and manufacturing consulting services require detailed industry knowledge and experience, but can add significant value to these industries by providing expert advice on various technical elements in their value chains, says...
Alert Close
Embed Code Close
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96