The future of motoring - don't get caught up in the hype
The local motoring industry really, really matters. Statistics presented at the National Automobile Association of South Africa’s Automotive Conference at the South African Festival of Motoring on August 31 showed that the industry represents 7.7% of SA’s GDP — more than our iconic mining sector.
The motoring industry also accounts for 14% of all exports, with 600 000 vehicles made locally in 2017 for foreign markets, at a value of R165-bn.
And our domestic market remains a heavyweight, with 564 000 new vehicles purchased here last year; that’s 45% of sales for the entire African continent. The next biggest African market is Egypt, with one-third of our new vehicle sales.
If you add our vibrant second-hand vehicle market, which runs at more than double the volume of new vehicle sales, you have at least 1.7-million vehicle transactions within South Africa in 2017, which represents a very significant and under-estimated force in our economy.
That’s the current situation, but much of this important conference was taken up with visionary talk of the future. Johan de Nysschen, former head of the Cadillac luxury car division in the United States, captured the sentiment when he said: “There’ll be more technological development in the motor industry over the next five years than in the last 100 years.”
There was a lot of discussion around Artificial Intelligence, augmented reality, 4D-vision sensors, driverless cars, the trend away from auto ownership towards ride-hailing, electric vehicles, and cars as entertainment venues and media markets.
All of which is seductive, but probably distracting for our market.
Even in the first world, a lot of these trends are taking far longer than originally predicted to gain any kind of critical mass. They are undeniably happening, but far slower than anticipated, and well behind some of the big talk of achieving major goals in the 2020s.
No one has yet achieved a satisfactory legislative framework for Uber, let alone driverless cars. And there’s not a single market where electric vehicles are outselling petrol-driven— in fact only Norway at 39% is even close — the next best is Iceland at 14% and then Sweden at 5%.
There’s also likely to be even more resistance in our long-distance environment (and those of the markets we export to), where such vehicles are both unproven and very dependent on a nationwide charging infrastructure. Even the widely criticised diesel engine continues to sell well internationally.
There’s also some solid research on how those labelled as Afrillennials are different from Millennials in some other markets, in that they see vehicle ownership as both an indicator of success and a practical essential. They will use ride-hailing services if they’re available, but still want their own car.
In truth, I believe our vehicle market in 10 years’ time will look remarkably similar to how it does now — bakkies and hatchbacks will still dominate — but fuel economy will become an increasingly important issue. Unless there’s a miraculous uplift in the rand or an equally miraculous downshift in the oil price, the R2 000 tank of petrol may not be far away. Not so long ago, you could buy a good car on Gumtree for that!
Jeff Osborne is Gumtree South Africa head of automotive