Philip Lutz, product manager for Monroe SA said, "Monroe has built a (solid) reputation in South Africa over the past seven years (and) our decision to go with a single brand (will) allow us to reduce costs all round - a benefit which will ultimately be passed on to the end consumer."

According to Lutz, the technological expertise from the engineering centre in Europe was already being utilized in the manufacture of certain new Armstrong shock absorbers (marked on the product with a "Monroe Inside" sticker). The phasing out of Armstrong also coincides with the launch of a new and more comprehensive Monroe range of products for this market.

"A key element of our strategy is to provide an entry-level Monroe shock to replace the Armstrong product. And, our coverage will include the majority of locally available vehicles. We have been able to do this by importing many of the specialised components but still manufacturing locally (at Struandale, in Port Elizabeth) and utilising local components to reduce costs."

The new Monroe range comprises products such as the basic Monroe Original - an hydraulic oil unit, Monroe Original Gas, which was reportedly "designed to compensate for older suspensions", Original Gas Adjust, which features four settings, Gas Magnum - a twin tube design suitable for bakkies and 4x4s and Monroe Magnum - a ultra heavy-duty shock for truck, bus and trailer fleets.

CADILLAC TOUCHES DOWN
General Motors South Africa launched its Cadillac brand into the South African premium segment of the market in the first quarter of 2007. The first vehicles which will be on offer are the Cadillac BLS, a mid-size luxury sedan, and the luxury Sports Utility Vehicle the Cadillac SRX. The Cadillac STS, a large sedan, will be launched during the third quarter of the year.

Five dealerships have been set up around the country at an approximate cost of R10 million each. These outlets are located in Johannesburg (Fourways), Nelspruit, Cape Town, Durban and Bloemfontein. Within six months the number of dealerships will increase to seven when Pretoria and Klerksdorp will be added to the distribution footprint.

Cadillac will be retailed in multi-brand facilities alongside Saab and Hummer, said Dr. Alf Bennett, Premium Channel Manager for Cadillac: "South Africa is amongst the first markets where General Motors has grouped these brands together under one banner and going forward this approach will be applied in other small and medium sized markets around the globe."

LONG AWAITED TYRE LEVY TO BE IMPLEMENTED
The industry is in the firing line from environmentalists, so it is good news that the imposition of a levy on old tyres seems to be nearer to implementation. The proposed levies (R15 for a car tyre and R40 for a truck tyre) will be put toward the disposal of old rubber in an environmentally friendly manner.

Draft regulations of the disposal of used tyres were published in the Government Gazette recently. The proposal says that all old tyres must be mutilated in such a way that they cannot be re-used (see the article in MIND February 2007). The implementation of controlled scrapping is scheduled for June 2008, which would bring an end to a process that started in 2001.

Almost 11 million tyres are scrapped annually in South Africa. One of the aims of the bill is to prevent tyres being burned to extract scrap metal.

Etienne Human, chief executive of the non-profit SA Tyre Recycling Project says that it is expensive and uneconomical to grind scrapped tyres into crumbs for the manufacture of rubber carpets, athletic tracks and/or an additive to tarmac for road construction. He said that the demand for those uses was small and the biggest application was to generate energy from the tyres by replacing fossil fuels with them for use in kilns.

2 800 VEHICLES REPOSSESSED A MONTH
The booming economy and availability of credit at comparatively low interest rates are resulting in many people buying vehicles that are actually beyond their financial means. About 2 800 vehicles are being repossessed monthly by Webank and Absa Vehicle and Asset Finance, the country's two largest vehicle finance houses.

However, the banks also say that the rate of repossessions hasn't peaked. Wesbank has repossessed as many as 2 000 vehicles a month about five years ago. Wesbank are currently repossessing at the rate of about 1 800 per month and Absa about 1 000 vehicles a month.

The banks say that about 75 per cent of vehicle purchases are financed.

DAYTONA GROUP GET ROLLS-ROYCE CAR FRANCHISE
The Sandton-based Daytona Group, which is making a huge success of selling Aston Martins in South Africa, has now been given the franchise for Rolls-Royce cars. This agency was previously held by listed motor retail group Combined Motor Holdings. CMH had acquired the Rolls-Royce franchise when it took over the Forza Group in August 2005.

The Daytona Group has already opened a dealership in Sandton and is opening a second at the Victoria & Alfred Waterfront in April.

Last year the Daytona Group sold 110 Aston Martins - compared with their original target of 40 cars - and that has resulted in South Africa being ranked the third biggest market in the world for the James Bond marquee brand. Only the United Kingdom and the United States sell more of the cars than the South African operation!

COST CUTTING PAYS FOR VW GROUP
Drastic cost-cutting measures in Germany and the sale of its Europcar subsidiary are paying big dividends for the VW Group. Europe's biggest car manufacturer more than doubled net profit to R26-billion for 2006.

However, there was a shadow over VW's good news in that Peter Hartz - the company's former personnel chief at the centre of a bribery and prostitution probe - was given a two-year suspended sentence and R5,4-million fine at a court hearing in Germany. He avoided a harsher penalty because he gave a full confession and had not enriched himself, although he admitted "buying" the influence of a prominent labour leader.

HYUNDAI BOSS CONVICTED OF EMBEZZLEMENT
It is not only VW that is being embarrassed by court proceedings against a senior company executive. Hyundai Motor chairman Chung Mong-koo has been convicted of embezzlement and other charges related to a "slush fund" scandal. He was sentenced to a three-year jail term. Three other Hyundai officials were also convicted on similar charges, but only given suspended sentences.

The court findings are going on appeal and Chung will continue in charge of the company while this process takes place.

VWSA FORCED TO CUT WORKING HOURS
While Volkswagen AG is enjoying a revival in its fortunes, its South African subsidiary was forced to cut production volumes and reduce working hours to a four-day week due to the loss of a consignment of components in a shipping disaster. The company lost 130 containers that were on board the cargo ship Napoli that went aground off the southern coast of England.

Effectively the company lost between 1 600 and 2 000 units.

SCANIA PROFIT JUMPS
Scania, the Swedish truck maker, saw its profit jump 20 per cent in the fourth quarter of 2006, as orders nearly doubled and sales reached an all-time high.

Scania, which successfully fended off a hostile takeover bid from VW-backed MAN, of Germany, posted a profit of R1,8-billion for the quarter.

CELEBRITIES IN SANDOWN MOTORS BEE DEAL
A number of South African celebrities are party to a R500-million empowerment deal with DaimlerChrysler SA, in respect of their interest in retail group Sandown Motors. The broad-based empowerment group, True Class Consortium, is headed up by Lot Ndlovu, who is vice-chairman of Nedbank. Other members include Felicia Mabuza-Suttle, Yvonne Chaka-Chaka and former Miss SA Basetsana Kumalo.

The deal, which had been in the making for more than two years, gives the consortium a 40% holding in the R1,25-billion company. (Last year the company's turnover was R6,5-billion).

FORD SUFFERS RECORD LOSS
Form Motor Company slid to a record $12,7-billion loss in 2006, far exceeding the previous worst year, which was 1992, when losses totalled $7,4-billion. The company has not been profitable since the second quarter of 2005.

Contributing to the loss was a 24 per cent cut in production in North America as the company scaled back to match falling demand. Ford does not expect its North American operations to become profitable until 2009 as it cuts jobs, closes factories, pays out retrenchment packages and alters its product plans away from an over-dependence on big pick-ups, for which demand is dropping.

Ford aims to close nine factories by 2008 and another seven by 2012. The company has paid no bonuses to its 6 000 executives for the past two years.

TRANSNET CONSIDERING BIG INVESTMENT IN CAR TERMINAL
Transnet is evaluating a feasibility study before committing to a new, R2-billion car terminal at the Durban port to handle expected growth in vehicle exports and imports in the future.

Last year the existing facilities handled more than 413 000 vehicle movements, either outbound or inbound, with about 70 per cent being in the latter category. Five years ago the terminal handled about 100 000 vehicle movements annually. The existing terminal has 10 000 bays and is bursting at the seams, despite expansion in 2004. Growth of 18 per cent is expected for this year.

If the feasibility study is approved then the first phase of the project could commence in May 2008. It is planned to locate the new terminal at Salisbury Island, on the southern side of the port, near the container terminal.

South Africa's other car terminals, at Port Elizabeth and East London, handle about 95 000 vehicles a years.

MCCARTHY BUYS VEHICLE SERVICING CHAIN
McCarthy Motor Holdings, the vehicle retailing division of Bidvest, has purchased a chain of 28 stand-alone vehicle servicing centres from Shell, which had operated the chain under the Shell Autoserv banner. McCarthy is retaining the Autoserv staff.

McCarthy chief executive Brand Pretorius says the centres will older vehicles and those that are no longer covered by a manufacturers' warranty. They will also have a role to play in providing service for the range of Chinese vehicles that the McCarthy Group will introduce to the local market later this year.

Pretorius said this would give immediate country-wide serviced coverage for the new entrants to the market.

IMPERIAL'S DISTRIBUTORSHIPS' CONTRIBUTION FALLS
The contribution by the imported vehicle distributorships to the overall profit of the Imperial Group for the six months to December 2006 has fallen as a result of the weaker exchange rate. Nevertheless, the distributorship division, which includes a large number of car and commercial vehicle franchises sourced from Korea, Malaysia, Japan, China, Europe and North America, was still the largest contributing division to Imperial's overall profit.

The distributorships lifted revenue to R10,6-billion, although operating profit fell almost 5 per cent to R615-million. The vehicle dealerships division grew revenue 24 per cent to R9-billion and operating profit went up by 30 per cent to R243-million, with both new and used vehicle sales beating the national market growth rate. Overall operating profit for the group increased to R2,5-billion.

PROFIT BOOST FOR MAJOR COMPONENT MAKER
Metair, the listed automotive component manufacturer, has seen its annual earnings surge by 27 per cent on the back of increased sales on the domestic market and strong growth in exports. Group turnover increased to R2,64-billion.

However, Metair managing director Theo Loock warned that the company's performance for the rest of the year would be affected by important model changes at DCSA (Mercedes-Benz C-Class) and Toyota (Toyota Corolla) and there would be no demand for components for these models for periods of between six and 12 weeks during the production change over. Loock said that some lay-offs would be necessary during this period.

He projected a 13 per cent increase in exports this year, compared to last year.

Products made by Metair include heating and cooling systems, shock absorbers, springs, lead batteries, lighting and signalling devices, plastic mouldings, wiring harnesses, electric motors and cables.

LOCAL PRODUCTION OF COMPONENTS
Local manufacturers must supply more components for vehicles made in South Africa as a means of addressing unemployment and the industry's negative trade balance, which amounted to R28,7 billion for the first 10 months of 2006.

The call came in a global automotive industry survey presentation by Gavin Maile, an executive director of KPMG. He said that although 32 per cent of local vehicle production would be exported this year it was of concern that 55 per cent of the passenger cars sold in South Africa last year were imports.

Maile said that this made it very important that the import of components for locally assembled vehicles be reduced and that they rather be made in South Africa. He said that for every job created in the component industry a multiplier effect meant that 5,5 jobs were created in the economy.

HIGH OIL PRICES CHANGE PRODUCT PLANS … FOREVER!
The high oil prices have permanently changed the way consumers view their vehicle purchase, according to a KPMG global survey of top automotive executives. They believe consumers are being driven towards more fuel efficient vehicles including hybrid versions.

The survey, based on the views of 150 senior executives at vehicle manufacturers and suppliers found that 80 per cent of executives believed fuel efficiency was the most important factor for consumers, followed by quality (88 per cent). Vehicle affordability and retail price were considered the most important factor for first time buyers in South Africa.

Motor industry executives believe the rising petrol prices have changed the sales mix and in future manufacturers will have to produce vehicles with improved fuel efficiency of vehicles using alternate sources of power.

PETRO SA LOOKS FOR RUSSIAN DEAL
State oil and gas producer Petro SA may secure Russian gas supplies to keep its Mossel Bay plant running in exchange for licensing its gas-to-liquid (GTL) technology to the Russians. The Russian natural gas would be transported to Mossel Bay in liquefied form to keep the GTL plant operating.