TFR angling for a big slice of automotive business

Transnet Freight Rail (TFR) expects to transport approximately 185 000 import, export and domestic automotive fully built units in 2012. This is according to Thabo Malatsi, senior accounts executive: automotive for TFR. “Following the doubledigit growth in vehicle sales recorded last year, the outlook for South Africa’s automotive sector continues to remain positive at the start of 2012, with confidence levels among dealers increasing for the first three months of the year,” said Malatsi. According to results from the latest WesBank Vehicle sales Confidence Indicator (WVsCI)* for the first quarter of 2012, overall confidence levels in sales activity amongst dealers increased to 6.4 out of 10 compared to 6.1 in the final quarter of 2011. This increase in confidence levels amongst the dealers indicates that the high sales activity within the sector in 2011 appears to have continued in 2012. According to Naamsa, the local vehicle sales market has shown unexpected growth at the start of the New Year, with total industry vehicle sales increasing by 8.8% year-on-year compared with the same period in 2011. With local production figures also set to increase, it is a market sector that offers considerable opportunity. While Naamsa warns that the industry’s future export performance depends on the direction the stressed global economy will take in 2012, expectations for the most part remain highly positive. “Total industry exports are projected to reach about 320 000 units during 2012, while the domestic market is expected to grow by 7% (611 500) units in 2012, based on the assumption that the economy will grow in real terms by between 3% and 3.5%,” said Malatsi. “Therefore, our domestic production by the locally based OEM is expected to increase by 13% from 540 500 in 2011 to 610 000 in 2012. This is in line with the industry’s ambitious target of producing 1.2 million vehicles in 2020.” This bodes extremely well for TFR, he said, as this can be translated into a 29% increase in rail business since the organisation is aiming to rail 186 700 in 2012 from 145 000 units which then improves its market share to 42%. “This will be a quantum leap on our current market share,” said Malatsi. “Of a potential rail market of 439 785 units, our target is around 186 700, which we are planning to achieve despite the challenges we face.” Some of these challenges when dealing with the automotive industry include the availability of specialised and dedicated rail wagons that can increase flexibility, limited rolling stock capacity and ever-changing car designs that make these units no longer suitable for TFR’s fixed wagon envelope. Additional issues are unpredictable market demand and unprecedented industry growth that far exceeds planned rail capacity investment funding. But, said Malatsi, there’s immediate market opportunity that rail can capture without major capital investment and that is the conversion of current short haul road export traffic to the port from the coastal-based OEMs to rail. “This will decongest the metropolitan roads, thus reducing traffic and carbon emission as well as lowering the transport logistics costs which will make our export units globally competitive.”