THE COLONY FIGHTS BACK

The ironic has come to pass. India, the one-time British colony, has now taken over two of the icons of the British motor industry - Jaguar and Land Rover - and at the same time obtained the rights to use three more revered brands in the history of the once booming British motor industry - Daimler (the British company not linked to Daimler-Benz), Lanchester and Rover.

The long drawn out negotiations ended on March 26 this year, with Tata Motors, the largest motor company in India and an important part of the Tata conglomerate, buying the British brands from Ford for US$2,3bn.

This is less than half the price paid for the two premium British brands when it acquired them in 1989 (Jaguar for US$2,5bn) and 2000 (Land Rover for US$2,7bn) as part of Ford's luxury brand strategy that started with the purchase of Aston Martin in 1987.

Volvo and, initially, Lincoln, were also part of the mix to make up the Premium Auto Group (PAG) and so fulfil a dream of former Ford CEO, Jacques Nasser. The dream became a nightmare with massive losses and Ford has had to indulge in a "fire sale" strategy because the parent company itself was haemorrhaging financially in the wake of the economic slump in the US.

Disposal started last year with the sale of Aston Martin to a consortium; of investors, led by a Kuwaiti group. Ford says it is not interested in selling Volvo at this time, but will give it more autonomy than has been the case in the recent past. (Volvo was bought by Ford in 1999 for US$6,45bn in 1999).

Ford has agreed to supply Tata with engines, metal pressings and other components, as well as providing engineering support.- including research and development - plus information technology (IT), accounting and other services. In addition Ford Motor Credit Company will provide financing for Jaguar and Land Rover dealers and customers during a transitional period, which will vary by market, of up to 12 months.

Although Jaguar has been in a loss-making position, this is more than made up for by the profitability of Land Rover, so Tata is confident the two brands will be viable and profitable when combined under its umbrella.

Tata's first overseas acquisition occurred in 2003 when its automotive division bought Daewoo commercial vehicles for US$102.

TRANSNET TO BUILD RAIL LINK FROM TOYOTA PLANT

Transport parastatal Transnet is spending R495 million to create a port rail facility for Toyota South Africa, the country's leading exporter of built-up vehicles, and other automotive users in KwaZulu-Natal. Transnet expects this project will increasingly result in new vehicles being transported to Gauteng by rail rather than on the road.

The project also involves the expansion of a siding to transport vehicles destined for export markets from Toyota's plant in Prospecton to the nearby port of Durban. (Currently all export vehicles have to be moved from the plant to the port by road on car carriers, adding to Durban's traffic congestion).

The projected cost of R495 million includes expansion at the port, at the vehicle terminal and the purchase of rolling stock. A total of 50 rolling stock wagons had been built already, with the locomotives that will pull them due to arrive later this year. The port previously had one berth and 6 500 parking bays. Now it has three berths for car carrier ships and 14 000 parking bays. The Durban car terminal can now handle 500 000 cars a year.

On average 44 525 vehicles were shipped into and out of South Africa's ports every month between April last year and March 2008, making a 12-month total of 534 300 units. The bulk of the vehicles - 402 580 units - used the port of Durban. East London movements totalled 45 430 units, while 86 287 vehicles arrived at or departed from the harbour in Port Elizabeth.

Interestingly, more than 65% of the vehicles were imports, with about 60% destined for Gauteng.

When the new port rail facility is competed cars will be loaded onto a train in the harbour and delivered to Gauteng, with one train a day initially. The number of trains will be increased when road transport contracts expire.

TATA CONSIDERING INDICA ASSEMBLY IN SA

Tata Africa is considering the viability of manufacturing its Indica car, a bakkie and a delivery van in South Africa. Tata Africa acquired the old Nissan truck plan in Rosslyn in 2006 for about R32 million and a lot of work had been done in equipping the plant. Tata was already operating a bus body building plan in Rosslyn, which made about 40 buses a month.

Tata had started selling its cars in South Africa three years ago and already had 67 dealers.

FIRST RAND SETS UP NEW VEHICLE FINANCING UNIT

First National Bank recently launched a new vehicle financing unit as part of FirstRand's determination to maintain its dominance in this market. FirstRand's Wesbank already had a market share of more than 36%.

The new unit has been launched to complement Wesbank's operations, which focus mainly on motor dealerships. The new FNB financing unit will service walk-in customers at all branches of First National Bank. Up to now the bank has referred requests for vehicle financing to Wesbank, but there was no guarantee that the business would go to that company.

The new offering was tested in Gauteng before being rolled out nationally. FNB believes its new unit had to potential to make R60 million a month if each of the bank's 670 branches generates a minimum of 10 sales a month.

MERCEDES-BENZ KEEPS TURNOVER CLIMBING

Mercedes-Benz SA grew its turnover for the 10th consecutive year last year, rising 13,5% to R37bn, despite tough trading conditions. Big contributions came from the group's commercial vehicles and the fast-selling new C-Class passenger car range.

The company's local subsidiaries, including Mercedes-Benz Financial Services, debis Fleet Management, Sandown Motor Holdings and Atlantis Foundries all made good contributions to the bottom line. Retail division Sandown Motor Holdings' turnover grew by R7.3bin.

TATA LOOKS FOR BUSINESS IN RURAL AREAS

Tata has launched an initiative to expand its LCV sales and expand its service footprint in rural South Africa by establishing new outlets called Tata Bakkie Centres. These dealerships will be located only in rural areas, with a sales target of between 100 and 150 units a year and would be a "bolt on" business for an existing vehicle repair workshop.

The first Bakkie Centre ahs opened in Bronkhorstspruit and a further 35 are planned throughout SA as well as one being set up in Namibia and another in Lesotho. The initiative aims to keep down the cost of entry with the objective of keeping fixed overheads below R20 000 a month, compared with an estimated R800 000 for a "traditional" dealership.

The target is to attract small and medium businesses able to attract security of R500 000. Each Bakkie Centre will receive support from Tata in the form of special tools, canopy and signage, computerised communication links, stock, a sales person and a demonstration unit. The company estimates that these dealers could break even by selling only two vehicles a month.

CAR HIRE RATES MOVE INTO OVERDRIVE

Vehicle rental rates are expected to increase between 10% and 12% this year, largely be cause of a rise in input costs, higher interest rates and higher car prices.

Interest rates have gone up by 70% in the past 18 months and this rate, together with vehicle depreciation costs make up 35% of the expenses in operating a fleet. The used car market into which rental fleets sell their cars is seen as "soft". Usually these cars are about nine months old or have 30 000km on the odometer, but some companies are now extending the kilometre limit to 35 000.

FORD'S PE PLANT MAKES "GREEN" ENGINES

The Ford Motor Company of Southern Africa's plant in Port Elizabeth is now making flexi-fuel engines for South America. These engines can run on petrol, ethanol (sugar-cane based fuel) or a combination of the two, as well as on compressed natural gas. Current planning is for the Struandale plant to make 5 200 flexi-fuel engines in 2008, all for export to South America.

The plant currently manufacturer and exports conventional RoCam engines for use in Ford vehicles worldwide. The plant will start production of the successor to the RoCam engine as well as the Puma diesel engine in 2010. About 90% of the engines made at Struandale are exported, with them having an average 65% local content by volume and value.

When production of the new range of engines gets under way it will push output up to 180 000 units a year.

JAPANESE CAR TRIUMPHS AGAIN IN SA'S COTY

A Japanese manufacturer took the title for only the fifth time in 23 years when the Mazda2 was a popular winner of the SA Guild of Motoring Journalists' Car of the Year contest. Despite Japanese cars making up a large percentage of the cars sold in SA the motoring journalists have usually favoured cars from Europe when selecting their COTY.

The only other Japanese cars to have won the coveted title were the Toyota Corolla Twin Cam Sprinter (inaugural event in 1986), Toyota Corolla GLi Executive (1989), Nissan Maxima 300SE (1992) and the Honda Civic 1.8 VXi sedan (2007).

All the other cars have been from Europe: five BMWs, three Opels, three Audis, two Renaults and one each from Volkswagen, Volvo, Alfa Romeo, Mercedes-Benz and Ford.

BEE TRUCK BUILDING CONTRACTOR LOSES OUT

Ikhwezi Truck Tech, a black empowered company that was given a contract to build Mercedes-Benz trucks in 2002 has had its outsourcing contract cancelled. Instead Mercedes-Benz SA will invest about R45 million in expanding its in-house commercial vehicle production.

The decision to move production back in-house was taken because of the growth in the truck market. When Ikhwezi was given the contract most MBSA Group's commercial vehicles were imported and only about 400 a year were assembled locally. This led to the decision to cancel the outsourcing of the assembly of semi-knocked down (SKD) Mercedes-Benz, Freightliner and Mitsubishi trucks.

However, last year production had jumped to 6 000 units and once again became a core business for MBSA, with considerable investment required. Ikhwezi's 60-odd employees have been transferred to MBSA.

MBSA says it will increase the plant's capacity to 10 000 locally-assembled trucks from completely-knocked down (CKD) kits. Another 5 000 imported trucks a year will be prepared for delivery at its delivery centre in East London.

TWO NEW BILLS HAVE VEHICLE MAKERS WORRIED

South Africa's motor manufacturers are concerned about two new bills that are the subject of public hearings by Parliament's trade and industry committee - the Standards Bill and the National Regulator for Compulsory Specifications Bill.

NAAMSA believes the proposed new system for setting standards and specifications in the industry could result in costly delays in the introduction of new models. Implementation of the proposals will see the regulatory function of the SA Bureau of Standards (SABS) hived off from its standard-setting and monitoring function and being transferred to a new body, the national regulator for compulsory specifications.

NAAMSA said the SABS had suffered in the past from high turnover and a lack of skills which affected its ability to test and certify vehicles expeditiously. It believed this "sluggish" administration would deteriorate further in the transition to a new system.

NAAMSA also complained about the "haphazard" nature of the formulation and application of compulsory vehicle specifications over the past few years. During this period there had been various interpretations of new regulations with ad hoc, unilateral applications. The manufacturers' body also opposed the power being given to the minister in proposed bills to promulgate compulsory vehicle standards which had not been fully canvassed and processed through technical committees.

The government says, in defence of the programme, that operators are buying 2 000 new taxis a month and that 80 000 route-based operating licences have been approved and 50 000 licences have been collected already.