It is highly unlikely that the board of the AB Volvo Group will invest in South Africa in 2016 as it did in 2015, says Volvo Group Southern Africa (VGSA) president Torbjörn Christensson.
The truck and heavy equipment group invested more than R100-million in the country last year, through the opening of new dealerships and a new used truck facility, and upgrading its competence development centre as well as it regional distribution centre.
The board would now like to see some pay-off from its investments, notes Christensson.
“They also want to wait and see how the [South African] economy develops. Lately there have been a lot of negatives stacking up on top of each other.”
He adds that South Africa is not “set up” as a “dream scenario” for investors.
“Before it was easier to get money to invest.”
Christensson says it is becoming increasingly difficult to counter the bad news flowing to Sweden.
The Scandinavian country “only hears” about the strikes and a new finance minister appointed on Wednesday and departing on Sunday. They do not hear about the “positive fundamentals” present in South Africa, he says.
“We try and tell them, of course.”
Christensson describes “his board in Sweden” as being “very cautious” on South Africa at the moment.
“Everybody is waiting to see what will happen.”
Christensson also laments the sudden and dramatic weakening of the rand against major currencies, which will “hit” the truck importer and assembler, as well as the South African truck industry, “tremendously hard”.
“The scope is not yet known, as the end is not yet in sight. Will the rand bounce back?
“Our pricing will need to change. We need to adapt to a new reality.”
Christensson says VGSA has lost 15% on the value of the trucks imported into South Africa over the last few weeks, owing to the rand, while it will need to pay an average of 5% more on salaries this year.
VGSA imports the Renault, Volvo and UD truck brands into South Africa, assembling Volvo trucks in Durban, and UD trucks in Pretoria.
It employs 900 people.