All facets of the South African motor industry have taken strain during the first half of 2007. One of the biggest blunders came with the introduction of e-NaTIS

Unfortunately much of it has been due to serious bungling by governmental bodies, fuel prices have risen to record levels, there’s been an interest rate hike and the implementation of a very stringent National Credit Act also added to negativity in an industry that was high-flying through most of 2006.

The much-flawed implementation of e-NaTIS – the system that the Department of Transport utilises for registering vehicles, booking and renewal of driving licences and the renewal of motor vehicle licences - was called a “catastrophe” by Jeff Osborne, CEO of the Retail Motor Industry organisation (RMI). It has already cost businesses and private motorists huge amounts of money and a great deal of wasted time. The bad news is that glitches are still occurring.

The main problem appears to be the fact that the timeline for implementation was so tight that the company that designed the system, the Tasima Consortium, did not have enough time to do adequate testing. There is also an investigation into the fact that altogether 11 companies had submitted tenders below the R408 million that is being paid to Tasima. The latest e-NaTIS scandal to rear its head - after complaints about a lack of security – is an admission by the Department of Transport that the e-NaTIS website was hacked.

As mentioned earlier, the National Credit Act, which was introduced on June 1, has caused consternation and concern in the motor industry as it impacted negatively on sales of new and used vehicles. The banks are evidently taking a conservative approach to new credit applications and it can take as long as two to four days to take a decision (compared with the “five minutes for approval” period that was previously possible. Some potential buyers are being scared off when they see their consolidated debt and monthly repayments on one piece of paper and could be out of the market for some time.

Wesbank chief executive Brian Riley said that the initial affect of the NCA was a drop to just over 20 per cent in the acceptance of applications for credit, from their usual level of 53 per cent. This rate has subsequently improved, but Riley said the amount of applications fell by 18 per cent in June. However, optimists are saying that this was a “learning phase” and credit will be granted easier and quicker in the future… The motor industry hopes that will be the case.

In addition, the recent introductions of leasing and rental agreements for private motorists have not found many takers. According to a leading banker “South Africans like to possess rather than pay for the use.”

Add in the rise in fuel prices, the hike in the interest rate, rising new vehicle prices (on the back of local inflation and exchange rate pressures) and 2007 is not proving to be the happy hunting ground that retailers enjoyed in 2006.

Then, of course, running in the background are the negotiations between the National Union of Metalworkers of SA (Numsa) and the motor industry’s Joint Bargaining Forum to work out the next three-year deal between employers and employees.

Talking about price increases, most motor companies try to slip them in without too much publicity, but one company made a big noise when it increased prices. The company was Subaru SA and they had a right to trumpet their achievement of holding prices for 77 months – an unprecedented achievement by any local motor company. Price increases of 2 to 3 per cent took affect at the beginning of June when the company was no longer able to absorb increased costs.

Spare a thought too for the local manufacturers who have been waiting since the last quarter of 2006 for the government to make an announcement about the future in terms of a revised Motor Industry Development Programme (MIDP). This process is really dragging and it now seems the review may only be released in the third quarter of 2007 – almost a year later than expected.

The delay has massive implications for the forward planning of the vehicle and component manufacturing industries. The country has already lost millions in investments as decisions to use South Africa as a manufacturing base are, to a large extent, dependent on MIDP incentives. When these incentives aren’t secure for the future, manufacturers tend to use suppliers outside South Africa.

Then, as we moved into the second half of this year of ”motor industry madness” we had a major insurer, Mutual and Federal engaged in legal battles with the organised body repairers and vehicle recovery companies, with the threat of strikes hanging over the whole process. What next?

The multitude of factors affecting the sales process resulted in a drop of 12 per cent in total vehicle sales in June, with passenger car sales falling a massive 19 per cent when compared with June last year.