Tyre manufacturing industry gears for growth

A high level of confidence in South Africa’s ability to manufacturer quality tyres has resulted in a R553 million capital investment in local production by the local tyre manufacturers over the past year. This key indicator is driving Nobuzwe Mangcu, newly appointed Managing Executive at the South African Tyre Manufacturers Conference (SATMC)’s passion for this R30 billion industry.

Mangcu was appointed as Managing Executive of the SATMC during March 2015. She is filling the gap left by industry veteran, Dr Etienne Human, former SATMC CEO, who has worked in the tyre industry for 23 years, and has been at the helm of SATMC for the past 16 years.

SATMC is a representative body consisting of the 4 South African tyre manufactures Bridgestone, Continental, Goodyear and Sumitomo. Together these 4 manufacturers produced a total of 8.6 million tyres in 2014 for the South African market and export.

“My role at SATMC allows me an in-depth view into the tyre production industry; a significant contributor to our country’s economy and one of the key supporting industries for the automotive industry,” explains Mangcu. “The automotive industry has very strong growth prospects in South Africa.”

Most recently, Sumitomo announced a R1.1 billion investment into its Ladysmith factory in 2014, increasing capacity and upgrading the technology used in the plant.  “Sumitomo produces tyres for the Chevrolet Utility and will begin supplying tyres for new models of Volkswagen and Toyota vehicles in 2016,” says Mangcu. Additionally, Continental Tyres recently invested a total of R65 million in a new Coal Boiler House.

“The opportunity to work with the local tyre manufacturers to identify opportunities to grow the tyre industry further and ensure that South Africa remains a sustainable location for tyre manufacturing excites me tremendously,” says Mangcu.

Similarly, Human says that he has found great fulfilment in making a contribution to the industry, creating a platform for the success and sustainability of the tyre industry in South Africa.

Mangcu’s focus for SATMC will be on finding workable solutions to the challenges facing the South African tyre industry in order to retain and grow tyre production in South Africa, while finding opportunities to enhance government and industry co-operation to work together towards this objective.

SATMC would like to thank Etienne for his dedication to SATMC and the many years of tireless service to the industry.

For more information on tyre safety or the tyre industry, contact SATMC at info@satmc.co.za.

Also view:

Tyre Safety and Safe Driving

Tyre manufacturing industry gears for growth

Tyre manufacturing industry gears for growth

A high level of confidence in South Africa’s ability to manufacturer quality tyres has resulted in a R553 million capital investment in local production by the local tyre manufacturers over the past year. This key indicator is driving Nobuzwe Mangcu, newly appointed Managing Executive at the South African Tyre Manufacturers Conference (SATMC)’s passion for this R30 billion industry.

Mangcu was appointed as Managing Executive of the SATMC during March 2015. She is filling the gap left by industry veteran, Dr Etienne Human, former SATMC CEO, who has worked in the tyre industry for 23 years, and has been at the helm of SATMC for the past 16 years.

SATMC is a representative body consisting of the 4 South African tyre manufactures Bridgestone, Continental, Goodyear and Sumitomo. Together these 4 manufacturers produced a total of 8.6 million tyres in 2014 for the South African market and export.

“My role at SATMC allows me an in-depth view into the tyre production industry; a significant contributor to our country’s economy and one of the key supporting industries for the automotive industry,” explains Mangcu. “The automotive industry has very strong growth prospects in South Africa.”

Most recently, Sumitomo announced a R1.1 billion investment into its Ladysmith factory in 2014, increasing capacity and upgrading the technology used in the plant.  “Sumitomo produces tyres for the Chevrolet Utility and will begin supplying tyres for new models of Volkswagen and Toyota vehicles in 2016,” says Mangcu. Additionally, Continental Tyres recently invested a total of R65 million in a new Coal Boiler House.

“The opportunity to work with the local tyre manufacturers to identify opportunities to grow the tyre industry further and ensure that South Africa remains a sustainable location for tyre manufacturing excites me tremendously,” says Mangcu.

Similarly, Human says that he has found great fulfilment in making a contribution to the industry, creating a platform for the success and sustainability of the tyre industry in South Africa.

Mangcu’s focus for SATMC will be on finding workable solutions to the challenges facing the South African tyre industry in order to retain and grow tyre production in South Africa, while finding opportunities to enhance government and industry co-operation to work together towards this objective.

SATMC would like to thank Etienne for his dedication to SATMC and the many years of tireless service to the industry.

For more information on tyre safety or the tyre industry, contact SATMC at info@satmc.co.za.

Also view:

Tyre Safety and Safe Driving

Tyre manufacturing industry gears for growth

October 2014 vehicle sales: new car sales show resilience driven by 1.6% growth year on year in passenger vehicles sales

“Despite a poor economic outlook, new car sales continue to show resilience driven by 1.6% growth year on year in passenger vehicles sales. This is driven by new model launches, incentive packages  and pre-emptive buy to avoid car price increases. Despite the new car sales growth, an increasing number of buyers continue to seek value in the used car market, which has also seen a positive growth of 8.1% month on month.”

General Comments on October 2014 NAAMSA sales:

• The month of October 2014 experienced a 2.36% decrease in sales compared to September 2014.


• Month on Month Passenger vehicles declined by 5.24% while Light Commercial Vehicles increased by 4.42%.


• Year on Year monthly comparison shows an increase of 4.90% in October 2014 compared to October 2013.


• Year to date (January – October 2014) comparisons shows that vehicle sales are down by 1.83% in the first 10 months of the year when compared to last year.


• Month on month Exports increased in October 2014 (4.49%) with Passenger vehicles decreasing by -5.95% and Light Commercial Vehicles growing by 22.17%.


• Year on year monthly comparison shows an improvement in exports of 32.97% in October 2014 compared to October 2013.


• AMH & AAD decreased in October 2014, 6.44% month on month.

General Comments on October 2014 Standard Bank VAF Personal Applications:

• In October 2014 applications for both new and used vehicles experienced positive month on month growth, 7.1% and 8.0% respectively.


• Applications in both Passenger (8.1%) and Light Commercial vehicles (5.7%) had positive month on month growth in October 2014.


• The number of applications with RV’s increased by 12.4% month on month while the number of applications with deposits increased by 3.4% month on month.


• The Average Contract Term on applications increased from 67 months to 69 months (October 2013 to October 2014), year on year growth of 3.0%.


• The average application size increased from R189 818 in October 2013 to R211 704 in October 2014, a 11.5% year on year increase.

General Comments on October 2014 Standard Bank VAF Personal New Business:

• In October 2014 new business experienced positive month on month growth in both new (25.5%) and used (22.1%) vehicle markets.


• Passenger vehicles and Light Commercial vehicles both had positive month on month growth, 28.6% and 24.6% respectively.


• New business deals with deposits increased month on month by 10.0% and declined by 25.5% year on year.


• New business deals with RVs increased month on month by 37.9% and 43.9% year on year.


• The Average Contract Term increased from 65 months in October 2013 to 67 months in October 2014 (3.4% year on year growth).


• The average deal size increased from R262 100 in October 2013 to R307 465 in October 2014, a 17.3% year on year increase.

General Macro and Industry Comments:

• The SARB left the repo rate unchanged at 5.75% following its September MPC meeting. The outcome was in line with the industry’s forecast. According to Standard Bank this was based on the SARB’s revised forecasts for headline inflation.


• Headline CPI annual inflation rate in September 2014 was 5.9%. This rate was 0.5 of a percentage point lower than the corresponding annual rate of 6.4% in August 2014.


• The transport index decreased by 1.5% between August 2014 and September 2014. The annual rate decreased to 6.9% in September 2014 from 7.1% in August 2014.


• SARB’s growth was revised lower, from 1.7%, 2.9% and 3.2% y/y in 2014, 2015 and 2016 respectively to 1.5%, 2.8% and 3.1%. Standard Bank expects GDP for 2015 and 2016 to continue to disappoint to the downside. The SARB has lowered its growth forecast for 2014 successively at each of the last 6 meetings (starting from 3.3% at the September 2013 meeting).


• Year to date petrol prices have dropped by 2.8% (inland) and diesel by 7.9% (inland).


• The price of Petrol will drop by 45 cents per litre from the 5^th of November 2014 while the price of diesel will go down between 60 and 61 cents per litre.

[Comments by Nicholas Nkosi – Head of Standard Bank Vehicle and Asset Finance - Personal Markets]

For more info on buying a vehicle also view:

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October 2014 vehicle sales: new car sales show resilience driven by 1.6% growth year on year in passenger vehicles sales

Growth, profit and awards for MiWay

The MiWay success story continues with the insurance company receiving top honours in the prestigious Mail & Guardian Top Companies Reputation Index Awards on 26 September 2014. This latest accolade in the short-term insurance category, follows on the back of strong growth and profits posted for the first half of 2014.

MiWay entered the short-term insurance market in 2008 as a greenfields initiative and has grown its client base to over 220,000 with annualised premium income of R1.5bn. Despite this strong growth, the company is achieving loss ratios of below 60% and an impressive net underwriting margin of just over 26% in the first half of this year.  The profit contribution to its parent company, Santam, was close to R50m for the same period.

Founder and CEO of MiWay, René Otto, says he is pleased with what MiWay has achieved in just over 6 years in a very competitive market.  “Our goal is to build a world-class business. Receiving recognition like the M&G TCRI Award serves as encouragement that we are on the right track.  The fact that we are a relatively young company, in a very competitive space, makes this award so much more pleasing. A company’s reputation is after all its most valuable asset.”

Over the last few years, MiWay has scooped numerous accolades including multiple awards in the Deloitte’s Best Company to Work for survey; and best short-term insurer in the Ask Afrika Orange Index Service Awards.

Otto continues to say, “It is easy to grow, but not so easy to grow profitably. If you add to the mix the challenge of building a strong reputation, the task becomes even more challenging. I believe our strong focus on our core company values, plays an important role in bringing these forces together.”

“I am confident that MiWay’s current book, which consists mainly of short-term personal lines business, can continue to grow profitably with a number of new growth initiatives planned for later this year and early 2015,” concludes Otto.

Additional Info: 

MiWay is an Authorised Financial Services Provider (Licence no: 33970)

MiWay Insurance Limited (‘MiWay’)is a direct, short-term insurance company, offering customers a range of short-term insurance products including motor, household and homeowners insurance as well as add-on products such as warranty cover and liability cover. MiWay’;s shareholder is Santam, a blue-chip JSE-listed company.

Growth, profit and awards for MiWay

NAAMSA vehicle sales report for May reveals vehicle retail vulnerability in low economic growth

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General Comments on May 2014 NAAMSA sales:

• The month of May 2014 experienced a 7.41% increase in sales compared to April 2014.


• Month on Month all goods types experienced positive growth.


• Year on Year monthly comparison shows a decrease of -9.22% in May 2014 compared to May 2013. The average sales per day in May 2014 were less than May 2013 (1,979 vs 2,096 at 25 business days and 26 business days respectively).


• Year to date (January – May 2014) comparisons shows that vehicle sales are down by -5.89% in the first 5 months of year when compared to last year.


• Month on month Exports decreased significantly in May (-7.05%) with Passenger and Bus being the main contributors, although in comparison to May 2013, there was a decrease of 40.5% in exports experienced.


• AMH & AAD saw an increase in May 2014, although at a slightly low percentage of 1.95%.

General Macro and Industry Comments:

• The country’s Q1:14 Gross Domestic Product slowed to 1.6% y/y from 2.0% in Q4:13 and from 3.8% q/q in Q4:13 to 0.6% q/q in Q1:14. Standard Bank Research has revised its GDP forecast for 2014 to 2.0% down from 2.1%.


• The MPC left the repo rate unchanged in the third week of May from the 0.50 bps rate hike in the beginning of the year (end January).


• Headline annual inflation rate (CPI) increased from 6.0% y/y in March 2014 to 6.1% y/y in April 2014. On average, prices increased by 0.5% between March 2014 and April 2014. Transport index increased by 0.4% of a percent point between March 2014 and April 2014, this was mainly due to a 5c per litre increase in petrol price. The annual rate decreased to 6.8% in April 2014 from 6.9% in March 2014.


• Standard Bank research commented in addition, new vehicle price inflation accelerated to 7.0% y/y in April, from 6.7% y/y in March, which could be on the back of the weaker currency.


• Fuel prices have risen by 34.3% in petrol (inland) and risen by 26.5% in Diesel (inland) since Jan 2012 to May 2014. Fuel prices have risen by 82.7% in petrol (inland) and risen by 88.6% in diesel (inland) since Jan 2010 to April 2014. Further, the price of fuel in the country has gone up by 287% in petrol and up by 417.2% in diesel since Jan 2001.


• All of these factors are expected to hinder vehicle sales growth.

Factors that will inhibit growth include the following:

• Low level of economic growth is expected in 2014, 2.0% for 2014 (Standard Bank Research).


• Rising inflationary pressures will remain a challenge. Food, fuel, above inflation wage settlements, as well as exchange rate fluctuations will pose risks to the inflationary outlook.


• Exchange rate fluctuations will also have an impact on vehicle pricing. With 2 thirds of vehicles sold in RSA being imported (NAAMSA) pricing will be vulnerable to a depreciating Rand.


• The vehicle replacement cycle may have reached its peak, putting further dampening pressure on sales growth.

South African Vehicle Exports: (1st Quarter)

• From the first quarter of 2014 to the first quarter of 2013 export volumes decreased by 16.42%. This equates to 11,867 less vehicles exported in the first 3 months of 2014 compared to 2013.
• PAS vehicles (48.9%) and LCV’s (50.7%) together made up 99.6% of total vehicle exports in the first quarter 2014.
• These seem to suggest that PAS are in decline, with a decrease of 6.43% from 2012 to 2014 while LCV’s increased by 15.74% during the same period.
• As at the end of the 1st quarter of 2014 South Africa’s largest trading continent in terms of vehicle exports was Europe with 37%, followed by Africa with 32%, and North America with 17%. Asia and Australasia.
• Even though Exports decreased overall, Africa and Europe have both increased in their percentage contribution of vehicles being exported from South Africa, growing by 14.65% and 16.04% respectively. Asia and North America declined by -8.05% and -33.62%.
• In terms of volumes South Africa exported 20,495 vehicles into Africa in 2013 compared to 19,639 in 2014 showing a 4% decrease. Europe had 23,013 vehicles imported from South Africa in 2013 decreasing to 22,318 vehicles in 2014 showing a 3% decrease.
• The decrease in export volumes could be due to the Mercedes-Benz C-Class model not being exported in the first half of the year.
• The key driving factor in the decrease in the number of vehicles exported into Africa may be down to the decrease in the number of Light Commercial Vehicles (LCV) being exported. LCV’s grew by 18.35% from 2012 to 2013 (15,019 to 17,775), however, in 2014 LCV’s declined by 14.41% from 2013 (17,775 to 15,214). Of the total vehicles exported into Africa LCV’s made up 83% and 87% in 2012 and 2013 respectively, this has dropped to 78% in 2014.
• Although Europe’s total % contribution has increased over the years we can see that the percentage split of Passenger vehicles have decreased from 56% in 2012, to 48% in 2013 and 38% in 2014. The decrease in Europe’s Passenger vehicle imports is due to the increase in volume of LCV vehicle exported. In the first 3 months of 2012 South Africa exported 9,287 LCV vehicles to Europe; this has increased to 13,819.

NAAMSA Seasonality and Average Selling Days:

• On average May has ranked the 9th best performing month in the year since 2012. May 2014 had 25 selling days (Mon-Sat), with an average of 1,979 sales per day. May 2013 had 26 selling days, with an average of 2,096 sales per day.
• Between Jan and April 2014 the average selling per day has been 2,104.
• May 2014 has ranked the 44th best performing month out of the last 89 months since January 2007 and 4th best performing month this year.
• The average number of sales for May since 2012 has been 52,270 and the average number of sales for May since 2010 has been 45,677.

New vs Used Deals – SBSA vs Trans Union

• VAF saw a decline in application volumes from November 2013 to December 2013 for both new (18%) and used (19%), this then increased again from December 2013 to January 2014 (New – 11% & Used – 16%) and has subsequently remained flat during April 2014.
• Comparing TransUnion April 2014 to YTD April 2013, there is an increase of 21% in new vehicle sales and an increase of 20% in the used vehicle market.
• The new to used ratio in the market is showing an upwards trend, with currently 1.67 used cars being sold for every new.

[ Comments on NAAMSA New Vehicle Sales Report - May 2014 by Nicholas Nkosi – Head of Standard Bank Vehicle and Asset Finance - Personal Markets]

Also view:

Buying and Selling A Vehicle : Informed Decisions and the Vehicle Retailer

Vehicle Finance and Road Safety

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NAAMSA vehicle sales report for May reveals vehicle retail vulnerability in low economic growth