While the South African motor industry reported a solid growth in new vehicle sales during the first five months of 2012 in comparison to the same period last year, vehicle manufacturers and dealerships remain uncertain over prospects for the sector in the remaining seven months of the year.
According to Paul De Vantier, CEO of RGT Smart, an AltX-listed company that provides market intelligence solutions to the automotive sector, this uncertainty is placing industry players at significant risk of taking wrong decisions.
"The vast majority of cars sold in South Africa are imported, which means supply chains are long. Importers need to make decisions now based on what they believe they are going to sell in six months' time. In the current climate, they face the very real risk of shipping in large quantities of vehicles or components that may not sell if the car market in South Africa turns negative - a potentially disastrous scenario for them," De Vantier says. Accurate data and forecasts are crucial
Local manufacturers that export vehicles also face high degrees of uncertainty, as a result of the Eurozone crisis and general global uncertainty. According to De Vantier, it is therefore crucial that companies operating in the motor industry have access to accurate data and forecasts to help drive their strategic and operational decisions. Besides manufacturers and importers, these forecasts are also critical for dealers and dealer groups.
De Vantier says RGT Smart has already seen the effects of the increased need for this type of information and accurate forecasting on its business, with the company reporting a 16.8% increase in revenue for the year ended 28 February 2012, from R27.7 million to R34.4 million. The group also reported that headline earnings were up by 28.7%, while R5.2 million of cash was generated during the same period. Expanding into Africa
De Vantier says he is also seeing a significant increase in interest for information and data amongst local companies looking to expand into Africa. "Africa remains a huge potential source of growth for the motor industry, but it is a complex market, which means it is crucial for companies to have as much information as possible when devising an African strategy. To complicate matters, there is very little data available in many African countries, which means very often we are required to conduct primary data collection ourselves."
Commenting on RGT Smart's outlook for local vehicle sales for the remainder of the year, De Vantier says while growth levels are expected to taper off from current levels, single digit growth is expected. "We are forecasting growth of around 6% for 2012. This should be seen in the context that a number of other markets, including retail and housing, have turned negative."
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