Last year was a tough year. It was hard for consumers and hard for the automotive industry. 2017 is not looking as though it will be any better. Some economists predict not one, but two, interest hikes. Many car companies will come to the end of their period of forward cover resulting in increases in car prices and the fuel price is also likely to go up.
There are other factors too. Exchange rate fluctuations can happen for any reason and not even because of events here in SA. We are affected by what happens in the US and elsewhere and our market responds to major international decisions.
Household debt has improved but is still high, putting yet more pressure on consumers who are either holding on to their cars for longer or turning to the pre-owned market. The car makers are going to have to work harder to persuade us into a new car.
It is looking positive for the pre-owned market though, which increased dramatically in 2016 and which will benefit again in 2017. Many consumers are putting value for money ahead of badge snobbery and this will impact positively on a number of brands. The pre-owned market makes sense for those not willing to suffer the depreciation that comes with a new car or pay for extras.
Then there is downsizing. Once this meant getting less car and in some ways that is still true. However, in many cases it just means getting a smaller car but without sacrificing on the modern essentials such as connectivity and style. While the best new technology still often debuts in the flagship models, this tech is filtering down into smaller models faster than ever. Today you can buy a smaller car with digital instrumentation, a powerful engine, connectivity and a full suite of driver assistance systems, all at a price that is substantially less than a larger and more expensive model.
The South African consumer has one of the biggest range of model choices anywhere in the world and that looks set to continue. Manufacturers are bringing their models here quicker than ever and what you saw in these pages from a major motor show a year ago is likely to be in our showrooms this year.
Technology is also set to advance. While the electric car has made little impact in SA, a number of plug-in hybrid models such as the Mercedes C350e debuted late last year with more to follow in 2017. You pay a premium for them, of course, but we should see more than just a handful on our roads this year.
Connectivity will increase with more manufacturers cramming everything into a touchscreen in the car that connects us to the world. This area has evolved rapidly in the past couple of years and it will be fascinating to watch in 2017.
We can also expect yet more safety equipment in vehicles. With so many deaths and injuries on our roads, the arrival of models with more driver assistance systems is to be welcomed. Many of these systems are part of the ultimate piece of technology, the driverless car. We are years away from that, but this year will see more elements of it filtering into our market. More models will feature systems such as active cruise control, lane keeping assist and autonomous emergency braking. We hope infrastructure can be improved and that government agencies will work with car makers to enhance the safety of everyone on our roads.
While car makers might be looking at a hard time in terms of retail sales in SA this year, there should also be plenty of positivity surrounding local manufacturing. 2016 was a great year for vehicle exports and with BMW gearing up to switch from producing the 3 Series to the X3 and Nissan to make an announcement on Navara production here, there could be even more good news for the local automotive manufacturing industry.
In 2017 manufacturers and government will need to work smarter and consumers will need to buy smarter. – Mark Smyth