The Businessman of the Year is a measurement of excellence in performance using the key industry benchmarks produced by Sewells Group South Africa.

Most franchised dealers in South Africa participate in the benchmarking process.  Dealership financials and a large range of key statistics are uploaded using the Sewells Online System (eSOS) which then allows dealers to immediately view their own individual results.  Sewells can then view collective industry benchmarks which are determined by sequencing the values generated for the key performance indicators (KPI) and then picking the result at the 70^th percentile for revenue items and 30^th for expense items. 

Introduced in 2011 for the first time, Sewells now utilises a stratified selection procedure to nominate the Sewells Businessman of the Year contenders from each of three different categories (large, medium and small).  This is to give equal and fair opportunity to dealers of all sizes.

The categorisation is determined by taking the total turnover for all qualifying dealers (those who have subscribed and reported consistently for 12 months) and dividing the result by three.  These dealers are then ranked by turnover. The progressive addition of dealers’ turnover in the ranked sequence, commencing with the largest, until the total equalled the first one third strata, represents the large dealers. The progressive summing of dealers after this point, until the second one third strata, represents medium dealers and the remaining dealers make up the small category.

Dealers are ranked by ROI percentage from largest to smallest. The top 10 dealers are then selected with no repeat of brand in the selection. Each of these 30 dealers receives a special certificate giving recognition to their ‘Best Practice Performance’ for the year. The top five of each group then became the finalists attending the banquet – where the leading performer in each becomes the Sewells Businessman of the Year for 2012 in that category.

See more photos from the 'BotY' awards on Facebook: www.facebook.com/sewellsgroup

March 2013 sales were above expectations in the Chinese car market due to new models launched and strong dealer's rebates. Sales were up 10.9%, with first quarter up 14.8%. Full year 2013 is projected up 7%, above 20 million, first ever.

China car market statistics on March sales reported by CAAM informed about a total light passengers volume at 2.000.964 units, up 10.9% from last year. The first quarter 2013 sales were 5.431.000, up 14.8%

Car Passengers sales were 1.431.000 with a first quarter at 4.009.000, while Light commercial vehicles sales in March were 569.000 with first quarter at 1.421.000.

First quarter 2013 sales had been pushed up by SUV segment, surged 43% thanks to several successful new products launches, and locally produced luxury cars boosted 38%. Chinese brands improved their share, while Volkswagen posted its new record volume with the highest quarterly share ever.

Japanese brands improved their share compared with last quarter 2013, but their sales declined 14.(% year-on-year, for residual frictions among China and Japan and lower performance on many top selling models (Camry, Tiida, Livina and others).

Full Year 2013 will be a new record volume, with the market above 20 million vehicles, first ever in the history. Focus2move projection is for 20.5 million or 7% increase from 2012.

Looking at the best brands performance:

Volkswagen in 1st posted a negative month after the brilliant performance of February, selling 216.515 vehicles with a share of 15.1%, down 2.0 points of share from the previous month and up 1.1 points from the first quarter of 2012. Year-to-date March sales were 635.741 with a share of 15.9%, the best ever quarterly volume and share in China. Volkswagen held 9 models in the top 50, with the Lavida in 2nd position.

Hyundai kept the 2nd place in spite less favorable month, selling 84.998 units with a share of 5.9%, down 0.9 points of share from the previous month. First quarter sales were 262.214 with a share of 6.5%. Hyundai held 4 models in the top 50 with the Elantra, the fourth bestselling model in the world, in 4th position.

Toyota jumped to the 3rd position, up 2 spots from February, selling 84.381 vehicles, only 617 models less than Hyundai, with a share of 5.9%, up 1.6 points of share from the previous month. Year-to-date sales were 190.912 with a share of 4.8%. Toyota held 3 models in the top 50, with the Corolla in 5th position.

Buick was 4th, selling 70.520 units with a share of 4.9%, down 0.3 points from the previous month. Year-to-date sales were 210.010 with a share of 5.2%. Buick held 2 models in the top 50, with the Excelle as market leader.

Chevrolet was 5th, selling 60.098 vehicles with a share of 4.2%, down 0.9 points from the previous month. Year-to-date sales were 185.094 with a share of 4.6%. The best-selling model was the Sail in 6th position.

Honda jumped to the 6th position, up 4 spots from February, selling 59.899 units with a share of 4.2%, up 1.2 points from the previous month. Year-to-date sales were 137.226 with a share of 3.4%. The top model was the CR-V in 18th position.

Great Wall was 7th, up 1 spots from February, selling 56.800 units with a share of 4.0%, up 0.6 points from the previous month. Year-to-date sales were 151.240 with a share of 3.8%. The best-selling model was the Haval H6 in 14th position.

Nissan was 8th, selling 56.513 vehicles, only 287 models less than Great Wall, with a share of 3.9%, up 0.8 points from the previous month. Year-to-date sales were 154.703 with a share of 3.9%. The Sylphy was 10th.

Ford climbed to the 9th position, selling 55.786 units with a share of 3.9%, up 1.0 points from the previous month. Year-to-date sales were 129.097 with a share of 3.2%. The top model was again the Focus, the 2nd world' top selling model, in 3rd position.

BYD fell to the 10th position, selling 51.776 units with a share of 3.6%, up 0.1 points from the previous month. Year-to-date sales were 142.851 with a share of 3.6%. The best-selling model was the F3 Surui in 20th position.

Looking at the top models, the Buick Excelle gained the 1st place, selling 46.528 units with a share of 3.2%, up 0.3 points from the previous month. Year-to-date sales were 129.381 with a share of 5.0%.

The Lavida was 2nd, selling 38.334 units with a share of 2.7%, down 0.7 points from the previous month, followed by the Focus in 3rd with 37.814 sales and a share of 2.6%, up 0.2 points from February.

The Elantra was 4th, selling 31.858 units with a share of 2.2%, down 0.6 points from the previous month, followed by the Corolla in 5th, up 6 spots from February, with 30.147 sales and a share of 2.1%, up 0.7 points from the previous month.

The Chevrolet Sail was 6th selling 26.303 units with a share of 1.8%, down 0.4 points from the previous month, followed by the Sagitar in 7th with 24.942 sales and a share of 1.7%, and by the Bora in 8th, up 5 spots from February, with 21.098 sales and a share of 1.5%, up 0.2 spots from the previous month.

The Passat was 9th, selling 20.533 units with a share of 1.4%, down 0.4 points from the previous month, followed by the Nissan Sylphy in 10th, up 6 spots from February, with 19.637 sales and a share of 1.4%, up 0.4 points from the previous month.

Behind it was a positive month for the Toyota Camry in 13th, up 20 spots from the previous month, for the Honda City in 32nd, up 21 spots, for the Honda Accord in 36th, up 152 spots, for the Toyota RAV4 in 40th, up 25 spots, and for the Hyundai Sonata in 47th, up 142 spots from February.

It was a negative month for the Volkswagen Polo in 22nd, down 12 spots from the previous month, for the Kia K3 in 33rd, down 12 spots, and for the Citroen C-Quatre in 46th, down 19 spots from February.

Great Wall Motor Co Ltd (GWM), China's largest producer of sport-utility vehicles and one of the biggest producers of pickup trucks, plans to invest about US$300 million to set up an SUV production plant in Thailand. The plant will produce 100,000 vehicles per year on an area of 800,000 square metres. The investment will be divided into two phases, with each phase adding 50,000 vehicles to production capacity. The exact location of the plant has not been disclosed, but it is likely to be established on an industrial estate in Rayong province. Construction is scheduled to start by the end of this year, with commercial production due in 2015.

The passenger vehicle (PV) sales volume in March was better than expected, mainly due to two reasons. First, quite a few OEMs took advantage of the long Spring Festival holiday to finish production facility upgrading or changeover for the upcoming new models, and launched pilot production & realized capacity climbing after the holiday, therefore March and April has witnessed a large number of new models coming into the market, and this market has thus been enlarged; Second, a car-purchase rush at the end of March triggered by the highways giving free passage to small passenger cars during the Tomb Sweeping Day holiday overlaps with the inventory backlog reduction campaign at the end of each quarter, resulting in a sharp increase in the sales volume. Though the working days of March 2013 were 2 days fewer than those of March 2012, the narrow sense PVs’ retail and wholesale volume in Mar. rose by 19.1% and 16.5% YoY respectively, indicating the fast growth of both the capacity and the market.  

The PV sales volume in April is still likely to maintain a high level growth rate. The main reasons are as follows: First, there are 21 working days in April, as same as those of March but 1 day more than those of April 2012, so this April is in a relatively favorable position. Second, small passenger cars are exempted from road tolls on highways during the short May Day holiday, which is beneficial to the PV market, although the impact will be less since this is the 4^th execution of the toll-free policy. Third, the overwhelming advertising campaigns and the unveiling of numerous new models at Shanghai International Automobile Industry Exhibition in April will also give an impetus to the automobile purchase; those waiting to buy the latest models will all take actions in April. Fourth, April, neither too hot nor too cold, is a mild season optimum for automobile purchase. Fifth, the recovery of national economy may work as a catalyst. Without the government regulation, the terminal sales of the narrow sense PVs is expected to exceed 1.2 million units in April, more than 20% increase YoY. 

Young South African drivers, especially, are far more likely than their European counterparts to be distracted by phone calls and internet use while behind the wheel; it’s a worrying statistic that has emerged amongst others as a critical area of concern in Goodyear’s third annual Road Safety Survey.

As part of its commitment to understand and address driver safety, Goodyear probed the road behaviour of 6 400 drivers under the age of 25. The survey covered 16 markets (South Africa plus 15 European countries) and was designed to get inside the brain of the young driver and provide some interesting insights into the online generation on the road.

The poll revealed how, despite the fact that it is illegal in most countries, youngsters phone, text and surf the web while they are driving, with South Africans emerging amongst the top users of phones without headsets (61% vs global 44%), along with Swedes and Russians. Young drivers in the UK (15%), Spain (26%) and the Netherlands (27%) are the least likely to use their phones without headsets, perhaps proving that stricter enforcement of the law can be effective. South Africans are similarly far more likely to use their smart phones to send text messages, go online, visit social networks, send or read emails or use messaging services (65% vs global 41% average) – all actions even more dangerous than phoning on the road,. “Today’s young drivers have too many distractions at their fingertips. We used our third annual Road Safety Survey to probe precisely how these gadgets are impacting driver safety,” explained Lize Hayward, Goodyear South Africa Group Brand Communications Manager. “Our study was specifically designed to explore a wide range of factors from driver training through to general concerns amongst young drivers. Understanding driver behaviour assists Goodyear in its commitment to safety and helping people feel good on the road.”

While new technology undoubtedly provides a particular danger, Goodyear’s survey revealed that more traditional multi-tasking activities also continue to distract young drivers, with South Africans amongst the most easily misled. Some of the most common behaviours include: drinking (75% vs global average 58%), eating (71% vs global average 45%), looking at a map, changing GPS settings, shaving, putting on make-up, styling hair and even kissing (33%).

Source: Autolive magazine 28 March 2013

With the sales numbers filtering in at the end of each month presenting a gloomy picture, one is starting to wonder if the high-octane growth days of the Indian auto industry are well and truly behind us. March represents the close of the financial year in India, and it seems that the market will have to live with flat growth for the second consecutive year, at least as far as passenger cars are concerned. The commercial vehicle market is no different, and for the first time in as long as anyone can remember, the two-wheeler market is also bearing the brunt of sluggish customer sentiment.

High interest rates and rising fuel costs continue to put the brakes on what is universally accepted as one of the highest potential auto markets in the world, with a population of over a billion people and a vehicle penetration of about 20 vehicles per thousand people. Inertia when it comes to policy reform, and infrastructure that has not been able to keep pace with the growth in industry volumes are affecting the industry’s growth.

However, in this seemingly dark time, sparks of brilliance have emerged in the form of automotive OEMs that have been able to make hay. Mahindra & Mahindra, a home-grown manufacturer known for its rugged utility vehicles has stepped on the gas with its core strength at the right time – just as the market is starting to demand more versatile vehicles in the form of UVs. Mahindra’s victory has been in spotting market trends early, and addressing gaps in its portfolio by playing to its strengths. The results are for all to see.

While a number of factors continue to remain outside of the sphere of influence of manufacturers, there is still a lot that can be done in widening the sphere of control, as Mahindra has shown us all.

WesBank has announced its sponsorship of the Johannesburg International Motor Show (JIMS), which is held every two years.

The next event, which will take place at the Johannesburg Expo Centre (Nasrec), will be held between 16 and 27 October 2013. WesBank has secured the platinum sponsorship for JIMS for 2013 and 2015 as well as the first right of refusal for the 2017 event.

Chris De Kock, Executive Head of Sales and Marketing at WesBank, said that WesBank is the preferred finance partner of choice of most of the Original Equipment Manufacturers (OEMs). “It makes business sense for WesBank, the biggest financier of motor cars in Africa, to be associated with the biggest motor show in Africa.”

“Commenting on the sponsorship agreement, Nico Vermeulen, Director of the National Association of Automobile Manufacturers of South Africa, said that NAAMSA was delighted and proud to have Wesbank as the lead sponsor to the automotive industry and Johannesburg Expo Centre for the premier and largest internationally accredited motor show in the southern hemisphere. The well established synergy between the South African automotive industry and Wesbank made the choice of lead sponsor a natural decision”

The Johannesburg International Motor Show sets the stage for OEMs, dealers, consumers, fleet owners and various suppliers to the industry to come together to showcase their products, as well as the latest innovations at what will be the premier event on the calendar of the South African Automobile industry in 2013.

Thailand's motor vehicle production rose by 36.4% year-on-year in February, with vehicle shipments up by 22.3%. Output for the month stood at 229,204 vehicles, down by 2.89% from January due to fewer working days, said the the Federation of Thai Industries' automotive industry club. Output over the first two months of the year totalled 465,229 units, up by 50.7% year-on-year. Domestic car sales in February totalled 129,910 units, an increase of 42.3% year-on-year and 3.25% month-on-month. Car sales over the first two months of the year stood at 255,727 units, up by 51.9% year-on-year.

Although the overall Chinese auto market suffered a 13.6% year-on-year drop with the total sales of 1,345,600 units in February due to the one-week Chinese Spring Festival, German cars still maintained momentum of growth in sedan sales. Despite this momentum was not as strong as that of last month, compared with the same period of last year they still got 10% increase. Japanese cars, however, kept losing its share in the market.

In China’s passenger vehicle market, the domestic brands sales totaled 478,000 units, 36% drop year-on-year and 9.1% down month-on-month. And for foreign especially Japanese brands, they witnessed a dramatic fall of over 20% than last month. While compared with the same period 2012, foreign brands like German, Korean and French brands achieved a notable increase in passenger vehicles sales. Unfortunately, Japanese brands with over 40% drop could be an exception.

From the perspective of market share, Japanese manufacturers’ share in the Chinese auto market continued to shrink compared with the previous month and February 2012, but other foreign brands reported various degrees of growth, among which German manufacturers were the biggest winner.

If we take the holiday out of consideration and calculate it based on the actual working days, February’s passenger vehicles (consisting of sedans, MPV and SUV in a narrow sense) sales was actually 23% higher year-on-year. Moreover, for the past two months, the wholesale and retail volume of narrowly-defined passenger vehicles increased by 24.8% and 27.3% respectively, compared with the same period last year.

February marked the sixth month of consecutive auto sales growth, which started from last August. As an early economic gauge, the rebounding auto market assured the recovery of China’s domestic economy with a GDP growth rate of over 8%. In order to boost economy, economic restructuring would also be further strengthened.

Hit by escalated row of Diaoyu Islands early this year, February’s Japanese car sales declined significantly both month-on-month and year-on-year, which reflected the close relationship between politics and economy. China’s domestic own brands reported a positive year-on-year retail growth, but compared with last month, they suffered a more considerable drop than the average level. It was estimated that market share of domestic brand would not expand substantially this year. Although this month’s dealership inventory saw a slight increase, it was still within the normal fluctuation range. 

Every year, Sewells Group SA hosts a Study Tour to the NADA Convention in The United States, this year it was held in Orlando, Florida.

The Sewells Group South Africa, consisting of 6 people from the AMH Group, 3 people from Toyota SA and 3 current ADM delegates met at Johannesburg’s OR Tambo Airport on the 5^th February, for the long-awaited trip to NADA, USA.

By boarding time, the group had become acquainted with each other, and the stage was set for a super tour.

We landed in Atlanta and then caught a connection to Orlando.  Upon our arrival at our hotel, the Marriott at 12h00 on 6^th February, drama stuck!  The hotel had been over-booked, and they had to shuttle our group to a nearby hotel, the Caribe Royal (for 1 night…). This turned out to be less stressful than anticipated, with a lot of the Group saying it was a great hotel, and that they wouldn’t mind staying there for the duration of our tour!  Fortunately, everything turned out well in the end, and the next day we booked into the Marriott.

At this point, we were joined by the 7 people from the McCarthy Group, together with their tour leader, André Smith.  The McCarthy Group pretty much “did their own thing” but we again joined forces for the Tony Nolan presentation on the 9^th February.

On the 7^th February, the Group was collected by the transport company and departed to our dealer visits.  These visits are always a highlight of the NADA tour, and this year was no exception!  Because they suited the profile of our Group in terms of franchises, we visited the following dealers:

• David Maus Chevrolet.
• KIA Orlando East.
• Central Florida Toyota.

Some of the major learning points that came out of the visits were:

• Salespeople in the U.S. do not receive a basic salary.  They only earn commission and have to acquire their own car, pension, medical, etc.
• The dealerships are open 7 days a week, even on a Sunday!
• 70% of their sales are via the telephone and internet.  This has resulted in a dramatic decline in showroom traffic.
• Tyres are a big business, with one dealer confirming that tyre sales contribute to 25% of the total parts sales.
• They are servicing more and more hybrid cars.  These account for about 12% of the cars they service.
• It is interesting to note that 2 of the dealers started with the service department on their home page on the web site.

On 8^th February, Francois Heystek and Meyer Swanepoel accompanied me to the NADA Convention Centre to collect our registration packs.  We returned to the hotel, and these packs were distributed amongst the delegates.

Our group discussed the various workshops on offer, and Sewells Group provided advice as to which workshops they should attend and which workshops were not feasible to attend.

Interesting facts about the workshops include:

• There were 7 tracks (or subjects).
• The track on Social Media and the Internet offered 16 workshops, which was by far the most offered by any track.  There is a strong move towards this form of marketing, with a number of new guest speakers, as well as new exhibitors in this regard.
• By contrast to the above, the Service track offered only 3 workshops and the Parts track offered just 2 workshops.
• The quality of the presenters was generally of a very high standard.  However, the delegates were looking forward to the workshops on Customer Care and were disappointed by the one entitled Coffee Stains.  They really enjoyed the Customer Care workshop presented by Disney World College.
• A lot of American people had no problem standing up in the middle of a workshop and walking out if they felt they were not gaining anything by the subject matter.
• Interestingly, a comment was made by a few of our delegates, confirming that they had learnt more from the dealer visits we took them to, than from the workshops.
• It was very clear that the USA are embracing the concept of overall dealer management, and are focusing on ensuring that that all departments are functioning at optimum levels in order to support the overall objectives of the dealership.  There was a definite “passion” in this regard

The entire Group (Sewells and McCarthy) gathered for the presentation by Tony Nolan on the 9^th February.  Suffice to say, the delegates thoroughly enjoyed the presentation, which focused on sales trends within the USA and globally.  On our return to South Africa, Tony’s abridged CV and presentation was forwarded to everyone in the Sewells Group delegation.

There were a total of 632 exhibitors – this was 21 more than last year.  Again, a notable increase was the number of exhibitors showcasing social media and related packages.

Another interesting point I noticed, was the number of exhibitors offering Dealer Management Systems.  It appears as if the dealers are always looking for that one system which will wave a magic wand and just manage the dealership for them! 

Based on the information issued by the weather forecast bureau, thick smog has been shrouding central and northern parts of China since 8^th Jan 2013, taking the air quality to dangerous levels and to the worst on 13^th Jan. Smog become one of the biggest concerns to several cities over the recent two months. In the mid-January, the PM2.5 concentration index in Beijing was off the charts for several times. Beijingers who suffer from Level VI air pollution are eager to find a proper solution.

China’s car industry, inevitably at the forefront of this civil debate, has to face a second challenge --- air quality in the year of 2013 which was expected to witness a faster growth. Its first challenge is the traffic jam which has already incurred constant complains from the residents.

Smog is closely related to the recent severe air pollution as the monitoring data show that vehicle emission is one significant contributor to PM2.5 fine particulate matters. It’s told by experts that China’s not-yet-optimized petrol with high sulphur may explain the more polluting emissions produced by vehicles. From this perspective, we can learn from other countries by allocating the extra optimization cost to multi parties, which is a middle way to protect the environment as well as people’s livelihood.

To improve the air quality, the capital city will take the first initiative. On 19th Jan, the city government has published The Regulations on Beijing’s Air Pollution Prevention and Control- Draft Version for public comment. As per the Regulations, China will take atmospheric environment protection into consideration while planning national economy and social development. Moreover, the municipality could take driving restriction measures in some regions according to the prevailing air quality.

Mazda will set up a new Powertrain Manufacturing facility in Thailand to produce and sell SkyActiv transmissions for Mazda vehicles with a capacity of 400,000 units/year. SOP will be second half of 2015.

China's SAIC Motor Corp., which owns the British MG sports-car brand, will set up a 50,000 unit assembly plant in Thailand with the Charoen Pokphand Group to build MG cars for sale in Southeast Asia.

SAIC and CP Group initially will invest 1.8 billion yuan ($289 million) in the joint venture and plan to begin car sales in 2014, according to an SAIC statement. The Shanghai automaker will own 51 percent of the venture, with CP holding the rest.

The partners plan to expand annual capacity for the plant to 200,000 units, SAIC said, without giving a time frame. The automaker sold 90,035 MG and Roewe vehicles through June this year, according to its Web site.

SAIC is investing in factories outside China as it seeks to expand beyond its home market, where the automaker makes passenger vehicles through joint ventures with General Motors Co. and Volkswagen Group. China has been the largest trading partner with the Association of Southeast Asian Nations since 2009.

SAIC took control of the MG brand through a merger with Nanjing Automobile Group Corp., which bought the British brand and other assets for 604 million yuan in 2005 after UK group MG Rover Group Ltd., went bust.

MG was founded in 1924 near Oxford, becoming known for two-seater sports cars including the MGA, Midget and MGB, which ceased production in 1980 after the company was bought by the precursor of Rover Group as the UK car industry consolidated.

SAIC has spent about half of the 45 billion yuan that it has earmarked for r&d through 2015 for all its brands, including joint venture projects with GM and VW, according to an Aug. 14 statement on MG's Web site.

CP Group, controlled by billionaire Dhanin Chearavanont, has investments in industries including automotive parts, food, agriculture, pharmaceuticals and property development.

Source. Bloomberg

In the blink of an eye, China’s automotive market has gone passed 2012. As pointed out by China Association of Automobile Manufacturers (CAAM), the automotive market sales in China set another new high of more than 19 million units and again refreshed the world record to be the top market for four consecutive years. The annual production of more than 18 million units for 3 consecutive years marked a steady development stage achieved by China’s auto industry. According to the CAAM’s figures, the amount of auto sales progressed steadily in 2012, which was 19,306,400 units, increased by 1.9% compared with last year.

There is no doubt that China has become a big automotive market, and how to become a competitive automotive leader will be an eternal proposition of China for a long period. In 2013, Chinese auto market will become more calm and rational with increasingly intensified competitions. We will wait and see how the international auto giants divide the market, while joint venture automakers fight to get a share and how domestic brands struggle to survive.  

Nico Vermeuelen, the Executive Director of the National Association of Automobile Manufacturers in South Africa, is predicting massive export opportunities into Africa in the next few years.

 “Exports of SA-built vehicles grew by 19 per cent in 2012 and that is very significant.” Algeria as a  destination now ranks as the third biggest export market for South African-built vehicles, behind the US at 66,220, and the UK at 41,111. Algeria is at 24,281, Japan at 17,226, Nigeria at 14,874 and Australia at 14,325.

“Exports into Africa went up from 67,442 in 2011 to 80,221 in the year 2012.” Now if you take into account that the industry’s export totals are in the region of 278,000, that sees African countries accounting for nearly 35 per cent of our exports in 2012.

This is what we’ve been saying for decades, that we can be the springboard into Africa. The 41 countries that we export into in Africa have enormous growth potential. “And we’ve achieved this despite enormous competition from the likes of Chinese brands and Indian brands, and of course second-hand imports from Japan.” By manufacturer, Toyota and Nissan are the big players, as well as Ford.

On the passenger front Toyota is substantial with their Corolla. But Chevrolet, Jeep, Land Rover and Volkswagen are also players. Toyota of course, is by far and away the largest.

“As far as LCVs are concerned, Toyota led with 40,319 exports, followed by Nissan on 14,540, and then Ford on 11,541.” Those figures from Ford are impressive, as they didn’t start really developing any kind of momentum until April or May, as their supply problems delayed the full Ranger ramp-up. So that number is extremely respectable.

“There is a good cross section of medium and heavy vehicles also going to various countries.” UD Trucks are strong in the heavy segment. Extra heavy vehicles see Scania and MAN having some encouraging success, while on the bus side you have Scania and Volvo.

“That growth into Africa is compensating for the lower exports into Europe.” Historically, the 80,221 is a record. The last highest annual figure for African exports was 72,707 in 2008, but Africa, it must be remembered, was also hit hard by the global crises in 2009. That export figure went down to 44,691, a big decline, in 2009, and a further decline to 42,533 in 2010, and then a massive jump, close to 50 per cent, to 67,442.

Of course, the reason we believe exports into African countries will continue to build more momentum is that the continent’s economy is growing at a much faster rate than most other regions, apart from China, which is growing at close to eight per cent.

Africa’s growth rate is currently 5.5 per cent. “But with all the infrastructural developments taking place throughout the continent, and significant oil and gas discoveries in Angola and Mozambique, we can expect accelerated growth.”

The top ten African markets for South African vehicles exports are as follows:

• Algeria 24,281
• Nigeria 14,874
• Angola 7,781
• Zimbabwe 5,167
• Ghana 5,062
• Mozambique 3,586
• Zambia 3,443
• Kenya 3,171
• Gabon 1,569
• Tanzania 1,396

Nico Vermeulen, Executive

Director of NAAMSA.

Source: www.autolive.co.za

Full-year sales for Indonesia (2012) rose by about 25% compared to last year (2011).  It is also the first time that Indonesia Automotive Industry passed the 1 M sales mark (with 1,116,230 vehicles sold this year compared to 894,164 units last year).

Domestic Auto Market by category Jan-Dec 2012

Daimler (DAIGn.DE) Chief Executive Dieter Zetsche expects his contract to be renewed after his current term as head of the car and truck maker expires at the end of this year, he told a German newspaper. Investors grew increasingly worried last year about Daimler's inability to close the performance gap with rivals Audi (VOWG_p.DE) and BMW (BMWG.DE), prompting media speculation about Zetsche's future. "At the moment there are good indications that I will continue as the head of Daimler," Zetsche told Welt am Sonntag newspaper in an interview.

Daimler's supervisory board would take a decision on renewing his contract in February, he said. The maker of Mercedes premium cars issued a profit warning in October, saying it was facing "significantly more difficult market conditions". A source close to Daimler's supervisory board told Reuters in November that the problems would not stand in the way of renewing Zetsche's contract when the current one expires on December 31The German automotive group has promised 2 billion euros (1.7 billion pounds) in cost cuts at Mercedes by the end of 2014, the bulk of which to be front-loaded."I assume that we will be able to sell significantly more cars in the future and that our productivity will rise," Zetsche told the paper. "Overall, the number of employees should remain largely constant," he added.

Zetsche also said he was satisfied with the group's shareholder structure, saying the risk of a takeover "belonged to the realm of the imagination". Following a Chinese media report earlier this month that China Investment Corp (CIC) was interested buying a stake in the company, Zetsche told reporters at the Detroit auto show on Monday that he was not aware of such plans and was not in talks with the investor.

Despite setbacks, the country’s strategy for building an electric-vehicle industry could still get back on track.

China understands that embracing electric vehicles could help it not only to manage its energy dependency and environmental challenges but also to build a car industry that could leapfrog its global competitors in this emerging sector. But progress toward that goal has been disappointing, and the country needs a new strategy, McKinsey research finds. Automakers have produced only a fraction of the vehicles once expected. Ownership has fallen far short of projections, and the needed infrastructure has failed to materialize. Notwithstanding massive investment in battery R&D by automakers and suppliers, few vendors are qualified to provide batteries to the industry.

Despite such setbacks, electric vehicles continue to offer China enormous potential to achieve industry leadership and reduce the country’s dependency on imported oil and its environmental impact. A phased introduction of electric vehicles—starting with more cost-effective and less technologically sophisticated extended-range, plug-in hybrids—and fostering their early adoption in public fleets could play to China’s strengths and put the industry back on course to success. In April, the government indicated it was starting to move in this direction. But success will require better collaboration and coordination of efforts among government, automakers, and suppliers across the areas we lay out below.

A neat fit

Three years ago, the Chinese government unveiled an ambitious road map for expanding the country’s electric-vehicle industry. It believed that moving to a future dominated by electric vehicles rather than cars with internal-combustion engines could deliver a number of major advantages for China.

First, electric vehicles would reduce consumption of oil-based fuels and boost China’s energy independence: the cars would power up with electricity generated primarily from domestic coal. China otherwise faces the prospect that oil consumption will swell by 70 percent between 2010 and 2020, given current expectations for the per capita growth of vehicle ownership. The country would then find itself increasingly vulnerable to global supply fluctuations.

Second, electric vehicles could help reduce carbon dioxide emissions and air pollution, a significant problem in China, already the world’s largest emitter. On a well-to-wheels basis, battery-powered electric vehicles can cut carbon dioxide emissions by about 40 percent compared with vehicles powered by internal-combustion engines. Local mobile emissions of both carbon monoxide and nitrogen oxides could fall by roughly 99 percent and 50 percent, respectively.

Third, a large domestic market for electric vehicles would give Chinese automakers an excellent launchpad to reach the world stage. In 2009, the government recognized that while domestic automakers probably couldn’t catch up with their global rivals’ internal-combustion-engine technology anytime soon, they had the potential to assume a leading position in the fledgling electric-vehicle segment. This approach could succeed, the government hoped, if Chinese companies rapidly brought battery-electric vehicles to mass production and consolidated technological advances in batteries, traction motors, and power electronics.

Under this scenario, to abide by stricter Chinese-government regulations, foreign automakers would transfer increasing amounts of electric vehicle–specific intellectual property to their Chinese partners. Chinese suppliers would focus on building massive numbers of lithium-ion batteries and other electric-vehicle components to support the industry. What’s more, the central government believed that it could overcome the absence of a battery-charging infrastructure through its control of the economy.

Why electric vehicles have yet to gain traction

Despite a concerted effort by the government and domestic automakers, the expected surge in electric-vehicle production and sales has not occurred. Automakers produced just 6,000 battery-electric vehicles and plug-in hybrid-electric vehicles in 2011, taking the industry just a fraction of the way to the half-million units of production capacity the government had originally expected for 2015.

The government’s 12th five-year plan targets ownership of five million battery-electric vehicles and plug-in hybrid-electric vehicles by 2020. Yet just 1,000 of these vehicles were registered in the third quarter of 2011, less than 0.02 percent of new-vehicle registrations during this period. Despite investments totaling nearly 10 billion renminbi ($1.57 billion) in battery R&D by Chinese automakers and suppliers, few Chinese vendors are qualified to provide electric-vehicle batteries to the auto industry. Government-sponsored subsidies have failed to stimulate consumer demand. Electric-vehicle buyers in Shenzhen got 120,000 renminbi per vehicle for battery-electric passenger cars—some of the country’s highest subsidies—but automakers sold only about 600 such vehicles there by 2011.

Planned infrastructure rollouts have also failed to materialize. The Ministry of Science and Technology had called for the construction of more than 400,000 charging piles by 2015. Yet the State Grid Corporation of China (the national power provider) and China Southern Power Grid combined built only about 16,000 charging piles in 2011.

As a result, China has fallen behind not only its own goals but also other major automotive markets in its readiness to support an electric-vehicle industry. McKinsey’s electric-vehicle index, for example, assesses a nation’s electric-vehicle readiness in terms of supply and demand. China scores relatively low on both dimensions. Furthermore, in overall electric-vehicle readiness, the country fell from third place, in July 2010, to fifth, in January 2012—behind Japan, the United States, France, and Germany.

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Source. “Recharging China's electric-vehicle aspirations”, McKinsey Quarterly. July 2012. 

New research suggests that the price of lithium-ion batteries could fall dramatically by 2020, creating conditions for the widespread adoption of electrified vehicles in some markets.

Most experts agree that prices for energy storage will fall in coming years, but disagree over how far and how quickly. This is an important debate because a significant drop in battery prices could have wide-ranging effects across industries and society itself. In particular, cheaper batteries could enable the broader adoption of electrified vehicles, potentially disrupting the transportation, power, and petroleum sectors.

To inform the debate, we developed a detailed, bottom-up “should cost” model that estimates how automotive lithium-ion battery prices could evolve through 2025. Our analysis indicates that the price of a complete automotive lithium-ion battery pack could fall from $500 to $600 per kilowatt hour (kWh) today to about $200 per kWh by 2020 and to about $160 per kWh by 2025. In the United States, with gasoline prices at or above $3.50 a gallon, automakers that acquire batteries at prices below $250 per kWh could offer electrified vehicles competitively, on a total-cost-of-ownership basis, with vehicles powered by advanced internal-combustion engines 

Of course, the pace of adoption will hinge on a range of factors in addition to battery prices. Macroeconomic and regulatory conditions, the performance and reliability of the vehicles, and customer preferences are important. And the rate at which automakers realize lower battery prices could vary by three to five years—the length of a product-development cycle—depending on the investment and power train–portfolio strategies these companies pursue.

Moreover, the emergence of cheaper batteries will probably spur further innovation in other technologies, such as internal-combustion engines. These advances would increase the probability that the broader economics of transportation will be reshaped over the next decade—no matter which technology prevails.

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Source. “Battery technology charges ahead”, McKinsey Quarterly. July 2012. 

China has become the biggest market for General Motors: in 2010, GM and its Chinese joint-venture partners sold more than 2.35 million vehicles, 29 percent more than they did in 2009 and about 136,000 more than GM sold in the United States.

Given the importance of the Chinese market, GM is investing heavily in innovation there. In September of last year, the first phase of the company’s Advanced Technical Center opened in Shanghai. When completed, in the second half of this year, the facility will comprise four technical and design organizations: the China Science Lab, the Vehicle Engineering Lab, the Advanced Powertrain Engineering Lab, and the Advanced Design Center. The facility will pursue R&D not only for the Chinese market but also for GM’s operations worldwide.

Tapping into China’s innovation potential is a high priority both for Kevin Wale, the president and managing director of GM China, and for the rest of GM. Wale, who has led GM China since 2005, observes that innovation in China’s auto industry is more about commercialization models than technical achievements. But the latter will come, he says, and GM is actively preparing for that moment. In a recent interview with McKinsey’s Glenn Leibowitz and Erik Roth, Wale discussed the state of automotive innovation in China and how GM cultivates the local talent it needs to stay on the cutting edge.

The Quarterly: Can you describe innovation in China today? 

Kevin Wale: There’s a natural development across all industry in China that is happening at a pace no one has ever seen. You’re going to get a lot of innovation out here. I don’t think people understand that until they live in the environment. You can tell the story and people can hear you, but the people don’t understand the scale.

There are a lot of companies here—Chinese companies in particular—that are capable of very good innovation, doing it, putting it into the market, and building a big local supply or consumer base that will extend into the rest of the world. They are well into the area of innovation in selected industries, and they will continue to do that. As good traders, they know that matching the competition won’t guarantee that they will win; they want to be ahead of the competition.

The education system is putting out massive numbers of skilled people, and a lot of them want to be involved in more technical development, more tertiary industry, and more innovation. They know the support is there to work in these areas. You’ve got the desire from the business community to innovate, the desire from the government to innovate, a very good education seed pool, and a lot of people who want to make their mark in life.

The Quarterly: How are automakers in China innovating?

Kevin Wale: There is probably more innovation in going to market and in thinking about new business opportunities than there is in technical innovation. Technical innovation is lagging behind the rest of the world in maturity. The country is trying to get there as quickly as it can but doesn’t have the deep graduate research capability that the rest of the world has.

What China does better than any place else in the world is to innovate by commercialization, as opposed to constant research and perfecting the theory, like the West. When the Chinese get an idea, they test it in the marketplace. They are happy to do three to four rounds of commercialization to get an idea right, whereas in the West, companies spend the same amount of time on research, testing, and validation before trying to take products to market. The Chinese have an innovative way of doing innovation, something that the rest of the world is struggling to understand.

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Source: Innovating in China’s automotive market: An interview with GM China’s president, McKinsey Quarterly

Following a disappointing year of just 3.5% growth in the world’s car market, global insight company TNS today releases the findings of a new study to help local and global brands compete in China’s crowded car market. The Automotive Path to Purchase Study (TAPPS) is the world’s first real-time analysis of the car-buying process, which tracks every influence affecting consumer decision-making. Its results from China reveal that weak branding and an incomplete understanding of the buying process is undermining many companies’ efforts to build a presence in the world’s largest auto market.

Andy Turton, Global Development Director at TNS, said: “China represents a massive growth opportunity for automotive manufacturers – but we know that in this vast and disparate market, there are very different influences in the car-buyer’s path to purchase. Logging these in real-time, for the first time, provides a new level of accuracy to help auto brands better tap into the Chinese market - making sure they’re targeting consumers in the right way at every stage of the buying journey”.

With 470 models struggling to compete in China, promotional activity is everywhere. However, TAPPS shows these efforts may be compromised if manufacturers don’t take time to understand the ways Chinese consumers shop for new vehicles and how this differs to more mature markets.

Drawing on continuous and interactive conversations with over 1,200 car buyers in 184 cities over a 6-month period, the findings from TAPPS highlight five new rules for car companies hoping to grow their presence in China:

1. The dealer is your new best friend: Forget the Western perception of car salesmen out to make a quick profit at the consumer’s expense; in China, car dealers are viewed as the most reliable source of advice throughout the buying process. This is partly because the used car market is only now starting to emerge in China; in the West, trust is often eroded by the conflicting interests of dealer and consumer. Manufacturers who protect this trust by engaging with their dealer network in China to ensure a fair deal for customers will reap dividends.

2. ‘We’ matters more than ‘me’: In a nation where 80% of people are first-time buyers, people rely heavily on the advice of friends and family, as well as on social media, when it comes to choosing a car. Manufacturers need to understand how to mobilise customers and fans to become brand ambassadors, for instance by providing practical advice for new drivers via social media and customer support. Becoming indispensable to current owners and fans is key to strengthening perceptions of the brand and generating powerful third party endorsement.

3. Once consumers start looking, it’s too late: Brand loyalty towards cars in China is low and fewer people have fixed ideas about what they want at the outset. In fact, a third of those shopping after four months still have no idea what model or even type of car they are looking to buy. However, the average purchase period in China is far shorter than previously thought, with 40% of consumers deciding on a make and model within one month. Manufacturers can’t afford to wait until consumers start looking before engaging them with a compelling brand story.

4. Offer the right deal: Getting a good deal is extremely important to Chinese buyers: 80% buy a car having secured a discount, compared to around 40% in Europe. However, manufacturers must ensure promotions and discounts don’t undermine the brand’s integrity. Reducing prices too much can be negatively interpreted by consumers and could create a commoditised market where people care more about price than the brand they are buying into.

5. Ignore digital at your peril: 95% of Chinese consumers use online sources during the buying process, and around a quarter are classed as heavy users. People who buy within 1-2 weeks are more likely to be digitally engaged and are also more likely to buy premium brands. If manufacturers don’t invest in their online presence, they risk losing out on a lucrative segment of the market.

Turton concluded: “This study reveals that speed of decision-making, rules governing discounts and the great influence of social media create market dynamics in China unlike any in Europe. The key to maximum growth in China is a deep understanding of how to harness these in the right way, at the right stages of the buying process.”

Source. TNS China

Hyundai grew up a lot between 1986 when it entered the U.S. market and 2009, when the Genesis won North American Car of the Year, beating out the Ford Flex and Volkswagen Jetta TD. Three years later, the Hyundai Elantra was the bride, ahead again of her bridesmaids, Ford with the Focus and Volkswagen with the Passat. America’s automobile journalists don’t get everything right, but they do like new product, and that has been Hyundai’s forté. AutoRetailNet surveyed Hyundai dealers in May, and they overwhelmingly credit strong product as the biggest factor in the growth of the brand, with a minority of dealers crediting better marketing. “I really think it is the combo of strong product at the right price point,” said a dealer from Pennsylvania. “That gets the customers’ attention and they look, and they see the incredible value.”

The brand is selling virtually every Sonata that comes out of its Hyundai Motor Manufacturing Alabama factory in Montgomery, 20,000-23,000 a month. The 8,000 Elantras built domestically each month are backed up by an equal number of imports from South Korea. The factory is running on three shifts, which is profitable for the manufacturer, and the shortage of cars is profitable for dealers, as discounts are small: 7.4% of MSRP, less than Toyota or Honda. In addition, the brand imports the Genesis, Veloster, Equus, Azera, Accent, Tuscon and Veracruz, and gets the Santa Fe from its sister company Kia in Georgia. Hyundai dealers are largely content with the product that they already have. “Elantra, Tuscon and Veloster will sell,” said a dealer in Hawaii. “We need more inventory.”

Dealers proposed a minivan or a more competitive SU V, although one noted that the Santa Fe coming from Georgia “should help.”Most Hyundai dealers are aware of the capacity constraints on the brand, which has more or less sold out this year’s U.S. production of Sonatas and Elantra. “If more units are produced, there will be a growth factor for us,” said a dealer from Texas. “However, if the production of units remains the same, it will be hard to achieve growth.” Nearly half of the respondents predicted that their own Hyundai sales would grow by more than 10%, and 18% of respondents predicted a 20% boom this year, but the supply constraints cause problems in the dealer network. “Insufficient product and an allocation system that favors larger dealers may hurt us again,” said a dealer from Massachusetts.

Through April, Hyundai had sold 226,000 units, up 10.5% for the year, but sales were flat against April a year ago. Fixed operations will become more important to Hyundai dealers as years go by and fast growth of new cars slows. We asked how Hyundai Motor America could help improve fixed operations, eliciting a variety of responses. Among them: “It’s all about service retention and a realistic CSI survey.” “Co-op branded expenses like pens, writing tablets, bottled drinking water, and things along those lines.” “More accessories… and more cars.” “Require dealer service.” “Easier maintenance across each model.” “Advertise services.” We asked how Hyundai Motor America supports dealers compared with other brands that they know. Almost half said that the distributor was better than average or the best, but 22 percent said Hyundai was below average.

So far, Hyundai Motor America has avoided severe conflicts with its dealers over facilities, but the company is preparing stricter guidelines for Hyundai facilities. Two out of three dealers responding said that such standardization will help sales. While 11% said that the diversion of capital could hurt sales, the rest were neutral. Overall, the survey results demonstrate a continuing good relationship between factory and dealers.

Source: Auto Retail Net (June 2012)

"We are witnessing the evolution of the automotive purchase cycle, which takes into account the rapidly growing influence of social media on the car-buying process," said Kevin Root, Chief Product Officer of Dealer.com, who directed the study. "Dealers and manufacturers need to recognize the importance of this new person-to-person marketing phenomenon, where the advocacy of others is increasingly more valuable to consumers than traditional marketing. By making social media an integral part of the marketing mix, they can turn customers into loyalists and advocates, and through them, favorably impact decisions of others about what car to buy and whom to buy it from."

Significant findings from the study include the following: 

• 38 percent of new vehicle shoppers said they used or will use social media to research their next vehicle purchase.
• Of those who used Facebook while shopping, 41 percent said they saw a post that caused them to add a brand or model to their consideration; similarly, 28 percent said they saw a posting that caused them to add a dealership to their consideration.
• Approximately 25 percent of buyers use social media post-purchase to broadcast their purchase and ownership experience, showing a high level of engagement after the purchase. This number jumps to 33 percent for those loyal to a particular brand, and 37 percent for those loyal to a dealership. 
• Of those who were loyal to a brand, 44 percent are very or somewhat likely to recommend that brand to their social networks; among those loyal to a dealership, that number is 47 percent. 

Source. Dealer.com

The global passenger vehicle market is still on track for growth: only Western Europe is expected to post a loss in 2012

Global new registrations will once again set a new record in 2012, growing by almost 7% over 2011. In general, expectations have been revised slightly higher (up 0.3%) relative to the month before. Significant downward revisions were made for Argentina (down 110,000 units) as a result of economic problems in that country. On the other hand, the forecast was raised in India (up 300,000 units), where the weakness in demand seems to have finally been overcome. The outlook is also somewhat better now for Russia, the US (up 50,000 units each) and Japan (up 70,000 units).

The Asia/Pacific will be up almost 12% from the year before in 2012. This is attributable to the aforementioned situation in the Japanese passenger vehicle market and the continuing growth in China. Only in South Korea is a slight decline expected.

The NAFTA region is expected to continue to recover, although its former levels will remain out of range. Nevertheless, new registrations will exceed the 16 million mark by a significant margin. Eastern Europe will grow by more than 8% in 2012 thanks to the good conditions in Russia.

Western European passenger vehicle demand will be down again in 2012 (by 5%), as was the case in 2010 and 2011. New registrations are expected to fall in every country except Germany. Germany has been only slightly affected by the crisis so far, and its outlook for the current year is very good, especially in the job market. As a result, the German economy is expected to remain stagnant at the least, and will perhaps even manage to post slight growth.

Source: R. L. Polk & Co. 

The global profile of the 2012 Sewells Group study tour to the NADA US Convention was greatly enhanced by the welcome inclusion of two dealer group owners from India. Francis Paul Kuttukaran and Naveen Philip, two of three Directors of the family-owned Popular Vehicles and Services Ltd based largely in Kerala and Chennai, flew to Las Vegas to join the 30-member party which included 15 dealer principals from across South Africa, two from Angola and one each from Kenya and Zambia.

A subsidiary of the Popular Group which traces its history to 1939, the retail automotive arm was established 26 years ago and was among the first batch of Maruti Udyog dealers appointed in India. Including numerous individual multi-franchise new car showrooms (representing mainly Suzuki but including other brands such as Land Rover and Jaguar), the Popular organisation employs around 6000 people and also operates a wide network of service workshops, True-Value used car outlets and strategically placed Maruti Driving Schools.

Speaking with BenchMarker after his return from NADA US, Francis said the automotive operation had sold 50000 cars in a highly competitive year of 2011. He said that India’s equivalent of NADA (the relatively new Federation of Automobile Dealers’ Associations – FADA where he plays a prominent role) has successfully already held bi-annual local conferences in conjunction with the Auto Expo in New Delhi. Naveen told BenchMarker he had worked energetically to attend as many workshops at the Convention as possible, and was pleased to have also experienced exposure to some truck and transport inputs which were a new inclusion at NADA this year. His most interesting workshop session was titled ’22 lifelines to profit’.

Global new vehicle sales are growing at a much faster pace than this time last year, according to new industry data.  In February, global demand for passenger vehicles was up 15%* over the year before. All regions except for Western Europe and Latin America posted clear gains, which were in the double digits in some cases.

The Asia/Pacific region was up by 40% from the year before in February, according to preliminary estimates. Japan was up a good 30% over February 2012. In addition to the dynamic rebound in these markets, it is apparent that new incentives are beginning to bear fruit. Extraordinary growth is expected in China as well compared to a very weak February 2011 given the typically strong performance of that market, as well as the fact that the Chinese spring festival was celebrated in January this year.

In Eastern Europe (up 14%), the growth continued in February 2012 with double-digit gains, as Russian growth has not let up following expiration of the scrappage scheme. Latin America was down 10% from the year before in February, as that regions economic problems have started to leave their mark.

New registrations were once again down in Western Europe (down 10%). This trend has been driven primarily by the Southern European markets, which have suffered the most from the current financial crisis.

*based on data which is preliminary in some cases