September is supposed to mean rejuvenation, growth and all-round happiness. Poets are also inspired by spring, as they unleash their quills, rejoicing about trees sprouting, birds singing, breezes blowing, and temperatures pleasing
Spring has Sprung a Leak
The poem “Spring” by Gerard Manley Hopkins says it all, “Nothing is so beautiful as Spring - when weeds, in wheels, shoot long and lovely and lush; thrush’s eggs look little low heavens, and thrush through the echoing timber does so rinse and wring, the ear, it strikes like lightning to hear him sing; the glassy pear tree leaves and blooms, they brush the descending blue; that blue is all in a rush with richness; the racing lambs too have fair their fling.”
So who threw the outhouse in the river? Stats SA, that’s who, when they announced on 4 September 2018 that the country’s real gross domestic product had decreased by 0.7% in the second quarter of the year, following the first quarter’s GDP contraction of 2.6%. Thus, for the first time in nine years South Africa is in a technical recession. Not a good time to celebrate spring. But for every Pollyanna there is an idealist, and for every Cassandra there is a romantic. And given the state of our economy, and the state of our politics, I am rooting for the guys who always see a silver lining. One such guy is AutoTrader CEO George Mienie.
Mienie, in a press release received shortly after the shocking Stats SA news, says that original equipment manufacturers (OEMs) could actually benefit from this situation. “We have a large and vibrant vehicle manufacturing industry. Companies such as BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota and Volkswagen all build cars here. Vehicle exports are predicted to grow to 384 000 units next year (from an expected 340 000 this year), and a weaker rand is obviously good news for exporters,” he explains.
Mienie also believes that the local component manufacturers who are exporting will also benefit from the weaker rand. “We have a strong component industry here in South Africa. Catalytic converters have typically been the number one export (catalytic converters to the value of R18.7 billion were exported last year) but engine parts, tyres and engines are exported too,” he says. However, he does add the caveat that while the weaker currency is good news for exporters, the downside is that the prices of imported components and vehicles will rise.
But, wait for the next silver lining. Mienie says that this could present a unique opportunity for used car buyers right now. “We’ve seen that used car prices only increase about six months after new cars. Accordingly, if new car prices rise by 10% within the next month or two, used car prices will only rise by the same percentage about six months later. This means that used car buyers can get good value in the used car market right now. This is especially the case in top-end cars (vehicles costing over R500 000),” he says. Mienie adds that buyers are already getting value like never before. “Vehicle values are shifting dramatically – and, in many cases, downwards. This is why live market valuations are important; dealers need to meet the educated consumer at a place of practical truth.”
Finally, the press release concludes that while Mienie understands the concern surrounding recent developments, he says that both motorists and the motor industry will survive the current crisis. “The simple fact of the matter is this: South Africans rely on cars, buses and taxis for mobility. We don’t have a widespread train or tram network. Maybe we will need to tighten our belts and purchase used cars (instead of new) or we will have to buy down. Maybe we will need to hang onto our vehicles for longer (which will have positive spinoffs for service stations). Maybe motorists will buy cheaper cars (that emanate from China). But one thing is clear: South Africans will always need wheels.”
Don’t you just love the man! By implication, we need more Minis, and more Mienies.