CAR PRICES FALL
New and used car prices have declined by a total of 3,3 per cent in real terms in the past three years, according to Naamsa. The prices of new and used vehicles dropped by 1,2 per cent in 2004, 1,6 per cent in 2005 and were projected to fall by 0,5% in 2006. In addition, the vehicle inflation index, which records new and used vehicle prices, has risen less than the consumer price index for nine of the 12 years between 1995 and 2006.

However, the Naamsa report revealed that the industry’s negative trade balance widened in 2005 to R25-billion, from R18,8-billion in 2004 and R9,1-billion in 2003. Motor industry imports in 2005 totalled R72-billion and exports stood at R45-billion.

EU AND SA SLICE CUSTOMS TARIFFS
South Africa is set to become a more competitive production base for built-up vehicles exported to the European Union. This follows an agreement between the EU and South Africa on planned cuts to customs tariffs on car exports between the two markets.

In terms of the agreement South Africa will cut duties it applies to European car imports from the current 25 per cent to 18 per cent by 2012 and reduce import duties on components and trucks. In return, the EU will phase down to zero the import duties it applies to cars imported from South Africa by 2008

HYUNDAI IN F1 BY 2010?
South Korea’s major motor manufacturer, Hyundai, is rumoured to be planning to enter its own team for the country’s first Formula 1 Grand Prix, scheduled for 2010. F1 supremo Bernie Ecclestone has said he will help in the development of Korean drivers with the ultimate aim of finding an F1 driver.

Hyundai also intends returning to the World Rally Championship in 2008, while there are rumours that its sister company, Kia, could tackle the Dakar Rally in the future.

“LANDFILL TYRES” PUT LIVES AT RISK
Tyres salvaged from landfills are being sold to cash-strapped South African motorists, thereby putting lives in danger. One dealer says he purposely mutilates tyres before dumping them, only to find out that they are retrieved from the landfill sites, “repaired” with super glue, given a coat of black polish and offered for sale!

Only 6 per cent of the 11 million tyres scrapped annually are recycled, according to the chief executive of the SA Tyre Manufacturers’ Conference, Dr Etienne Human. This means that many of them go back onto vehicles, and it is estimated that between 14 and 25 per cent of road accidents are caused by faulty and damaged tyres.

Human added that a tyre with 1 mm of tread, needs 25 per cent longer distance to stop on a dry road than a new tyre, and in wet weather a smooth tyre has no grip at all.

STORM IN A HUMMER
The SA Bureau of Standards (SABS) and General Motors SA (GMSA) are taking legal action against Toits Motor Group over the marketing and sale of converted right-hand drive versions of the Hummer H2 on the local market. The SABS says Toits is contravening the Standards Act, while GMSA say they want to protect the Hummer brand and “to stop what we believe is an infringement of the GM trademark”. (GMSA will launch the smaller, locally-made Hummer H3 in South Africa in the first half of 2007).

The pre-owned Hummer H2s are imported into South Africa and then converted to right-hand drive by City Square Trading. They are sold through the Toits Motor Group for about R1,4-million each.

TVR FACTORY CLOSES DOWN
British sports car maker TVR has ended production at its Blackpool factory with a loss of 260 jobs, and operations are being moved overseas. Owner Nicolai Smolensky said the cars would be built in Europe with engines sourced from Britain.

TVR is one of Britain’s few remaining independent car makers, and the job losses are another blow to the British car industry, which lost 2 300 jobs in January when Peugeot’s Ryton plant was closed.

SWEDISH BEARING FIRM CLOSES SA FACTORY
The world’s largest manufacturer of bearings, Sweden’s SKF, is to close its factory in Uitenhage. The company said the plant’s limited size, dependence on imported raw materials and the strength of the rand had all affected the South African operation negatively in recent times.

The cost of closing the plant, which has 134 employees, will be about R70-million, and the manufacture of products currently made in Uitenhage will be transferred to other SKF operations. SKF closed two plants in the United States in 2005.

SA TARGETED IN TOYOTA BUDGET DRIVE
Toyota Motor Corporation of Japan is developing an affordable compact car to meet the requirements of emerging markets, and South Africa could be one of its target markets. A visiting Toyota executive, Yoshimasa Ishii, recently said the company was looking seriously at this project for countries such as Brazil, Russia, India and China, although he thought South Africa was also a suitable market.

VWSA TO DOUBLE EXPORTS
Volkswagen SA (VWSA) plans to more than double its vehicle export capacity. The manufacturer exported about 35 000 units in 2006 – similar to 2005 – but could increase this figure by between 40 000 and 50 000 units from 2009 onwards.

This announcement was made at the opening of the company’s new, R750-million paint shop in Uitenhage. Outgoing managing director Andreas Tostmann said that VWSA had invested more than R3 billion in plant, machinery and facilities over the past six years, and would invest a further R1 billion over the next two years.

NISSAN AND FIAT CUT TIES
Fiat Auto and Nissan SA are to terminate their assembly and parts distribution agreement on August 31, 2007, a year earlier than the original termination date of July 15, 2008. Nissan started production and distribution of Fiat products in 1990, but in 2002 the two companies agreed to separately develop their dealer operations. Fiat Auto South Africa is now linked to Fiat Auto Brazil’s operations and no longer directly to Italy.

FIAT AUTO AND TATA DISCUSS JOINT VENTURE
Fiat Auto and the diversified Indian group, Tata, are discussing the possibility of establishing a joint vehicle manufacturing plant at Rosslyn, near Pretoria. The two parent companies are considering sharing production platforms worldwide, and the local arrangement would be one of those ventures. Tata has acquired Nissan South Africa’s old truck plant in Rosslyn for R32-million.

GMSA SPENDS BIG ON SHOWROOMS
General Motors SA’s dealer network is spending about R784-million on new and upgraded facilities, including the construction of new, dedicated premium brand facilities for Cadillac, Saab and Hummer. There will initially be five premium brand showrooms in the major centres.

GMSA INVESTS IN NEW PRODUCTS
General Motors SA (GMSA) is to spend R620-million on new product development and expanding and upgrading its manufacturing facilities in Port Elizabeth. GM has invested R2-billion in facility improvements since its return to South Africa in 2004.

Among the company’s new programmes is assembly of the Hummer H3, first in left-hand drive form for export markets, and then in right-hand drive form for the local and other RHD markets. The local introduction will take place in May.

GMSA will produce about 14 500 Hummer H3s a year and export them to markets in the Middle East, Europe, the UK, Australia, New Zealand, Japan, Israel and Africa. This programme will be worth R18-billion in turnover over six years.

SASOL GOES FOR BIODIESEL
Sasol and the Central Energy Fund have selected Siyanda Biodiesel as their empowerment partner for a proposed 100 000 tons a year soya bean biodiesel plant. Sasol intends to blend biodiesel with diesel from fossil fuels in very low ratios, probably five per cent biodiesel to 95 per cent conventional diesel blend, so that no engine modifications are required. The proposed plant, to be located in Newcastle, Secunda or Sasolburg, would require about 600 000 tons of soya beans a year.

Biofuels may account for seven per cent of global transport energy needs by 2030, according to the International Energy Agency. About 14 million hectares of land is now used for the production of biofuels globally. This equates to one per cent of the world’s currently available arable land.

ALGAE A SOURCE OF BIODIESEL?
Local fuels firm De Beers Fuel Ltd plans to produce 16- to 24- billion litres of biodiesel a year from algae within five years, with an initial investment of R3,5-billion.

One acre of algae can produce 92 000 litres of biodiesel, compared to 350 litres produced from one acre of a sunflower seed farm, according to a De Beers spokesman.

ESKOM THREATENS FUEL STOCK
Eskom’s plans to meet the Western Cape’s growing demand for peak hour electricity by building two new turbine power stations could backfire in the face of the country’s growing diesel fuel needs.

The seven massive turbines – four at Atlantis and three at Mossel Bay – will consume vast amounts of diesel fuel that could amount to about two million litres a year. The project is being fast-tracked and the turbines could be operating by this winter.

However, South Africa is already short of diesel fuel and the local refineries are battling to meet current demand. The upside is that the stations could be converted to run on natural gas in the future if large quantities became available.

TOYOTA BUYS ISUZU SHARES
Toyota Motor Corporation has purchased a 5,9 per cent shareholding in Isuzu Motors Limited. TMC purchased the shares from Mitsubishi Corporation and Itochu Corporation for R2,6-billion. Mitsubishi will continue to hold 9,7 per cent of Isuzu shares and Itochu 7,2 per cent.

The share purchase by TMC is linked to a business collaboration agreement between the two companies. The main areas of focus will be the research, development and production of small diesel engines, joint R&D of emission control technologies with specific reference to diesel engines, and environmental technologies, including basic engine and other technologies related to alternative fuels

Isuzu will take the main role in the first two focus areas, while TMC will assume the leading role in terms of environmental technologies - including hybrids, fuel cells and electric vehicles, and ethanol, methanol and compressed natural gas alternatives.

TMC president Katsuaki Watanabe, speaking at the media briefing when the collaboration was announced, said that the ties between Isuzu and Toyota would lead to better quality, higher performance and better products at lower cost.

WESCO SELLS METAIR STAKE
Wesco Investments, which holds a 25 per cent share in Toyota South Africa, has sold its 39 per cent share in automotive components supplier Metair. Coronation Capital (Corocap) paid R591-million in cash for the share.

Metair’s relationship with the Wessels family (founders of Toyota SA) and Wesco spans more than 30 years. Wesco has not yet decided what it will do with the proceeds of the sale.