Sales of smaller, low-cost vehicles have been steadily increasing, as consumers face increased financial pressures, and this trend was likely to continue throughout 2014, Standard Bank head of vehicle and asset finance Sydney Soundy said on Thursday.

Speaking at a Standard Bank automotive breakfast forum, held in Sandton, he stated that technology has allowed for many changes in smaller vehicles over the years, with these vehicles now offering features such as air-conditioning, airbags and electric windows as standard, making their finish comparable to those formerly found in more expensive vehicles.

Hyundai Automotive South Africa marketing director Stanley Anderson added that vehicle inflation during 2013 was a minimum of 2% a quarter, which amounted to between 8% and 12% for the year. He expected this trend to also continue over the next year.

“The significant inflation puts the ownership of a vehicle further and further away from the average South African and, those who can still afford to buy a vehicle, will downgrade their purchases to a more affordable option,” he said.

Currently, performance was not the top requirement for a person looking to buy a vehicle, but rather value for money, Renault South Africa VP of sales and operations Leslie Ramsoomar stated, adding that the vehicle manufacturer had seen a change in its consumer patterns to customers becoming more demanding.

“Customers want cheaper vehicles, with technical specifications and a hassle-free after-sales service plan,” he explained.

Imperial Group automotive retail and car rental CEO Phillip Michaux added that consumers were also becoming more sophisticated and were doing thorough research before entering the vehicle showroom.

The market for affordable vehicles was extremely competitive and, for original-equipment manufacturers (OEMs) to perform well in these conditions, they would have to improve their efficiencies, Ramsoomar said.

“Efficiencies relating to the manufacturing process, logistics and transport all impact on the final price of the vehicle,” he pointed out.

He added that OEMs were “squeezed tight” and, therefore, would probably look to their suppliers to reduce costs.

“However, our suppliers will once again look to their suppliers, as all segments of the industry are currently constrained and, therefore, at the end of the day, I believe it is going to boil down to government creating a better operating environment,” Ramsoomar asserted.

He added that it was important for OEMs to anticipate industrial action and to be well prepared for such activity.

STRIKE ACTION
While this year’s strikes in the automotive sector were not unexpected, the effect on the industry was worse than anticipated, Michaux stated, adding that, should the situation not be resolved soon, it would have dire effects on the industry.

Soundy added that the industry had to learn from what was currently happening and come up with ways to better deal with the situation in future, as issues around wages and the potential for industrial action would always remain.

Ramsoomar pointed out that the strikes in the automotive sector were also particularly worrying as their effects were far-reaching.

“The automotive sector strikes affects South Africa’s competitiveness and ability to attract foreign investment,” he said.

PEOPLE’S WHEELS AWARDS
Meanwhile, the nominees for the 2014 Standard Bank People’s Wheels Awards were also made public at the breakfast.

Initiated by the Future Group, in association with Standard Bank, research house TNS South Africa and media partner, the Sunday Times, the People’s Wheels Awards claim to bring to the automotive sector a pioneering means of rewarding vehicle excellence while simultaneously offering relevant and useful information to the consumer market regarding ownership perceptions of vehicle brands – including reliability, durability and loyalty factors.

From June 10 to August 25, a total of 101 438 votes were cast across the competition’s 30 categories – the highest number received since the project’s inception in 2011, Future Group automotive division editor Wynter Murdoch said.

“Additionally, a record number of responses were received from vehicle owners in a survey designed to determine their satisfaction levels with regard to the cars and bakkies they drive every day,” he added. 

The winners would be made public at the Standard Bank People’s Wheels Awards Breakfast on November 21.