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JOHANNESBUG - Below are five automotive sector growth trends for 2018.

Growth will be modest: Cautiously optimistic expecting improvement in the premium segment of around 10000 units next year.

Growth will be entirely product driven: A poor economy and unstable rand mean growth will be entirely because of introduction of new products. SUV’s are gaining popularity.

Growth lacks a confidence foundation: Poor consumer sentiment is triggering a holding pattern among vehicle buyers. This needs investment in product experience and customer retention to drive improvement.

Growth needs intervention in a business case: Future large-scale investment in manufacturing capacity, even for importers, will not happen without a move to create an environment that delivers on a business case for this.

Growth needs credit: Further intervention in rate cuts and access to credit finance are key. Additional rates cuts expected in 2018.

While the broader automotive market can expect to see somewhat marginal improvement in volumes as we move into 2018, it remains highly unlikely that it will attract meaningful new investment until economic growth and an unstable rand are adequately addressed.

Key to this, is that growth - especially in the premium automotive segment - will be almost entirely organic and as a result of relative volume improvements arising from the introduction of new models.

For Audi, this includes the 2017 launch of the all new Q5 and new A3 S3 Sport models; as well the introduction of the new A6, new A7, new A8 and all new Q8 before the end of 2018. To complement this, we can also expect the introduction of the facelifted Audi TT and further investments in the Audi Sport brand next year.

In 2019, we will also see the introduction of CBEV, the first fully electric Audi vehicle in South Africa - bringing what is arguably the most technically advanced vehicle ever produced by Audi to this continent.

Most importantly, this represents an intentional multimillion investment in creating the youngest portfolio of vehicles available locally as part of a deliberate effort to address a scenario where economic fundamentals, access to credit and poor consumer confidence are working against efforts to develop this market.

What’s key, is that the very real impact of this on consumer behaviours is already being felt with a visible extension in the traditional time frames associated with a three-to-four-year new vehicle rotation cycles.

Further to this is improved access to credit finance and obvious positive benefits associated with improvement in interest rates and inflation.

Already we are seeing some strong positive improvements in volumes in August because of just this, and we expect this to continue with further rates cuts in 2018.

So, while not a new theme, a poor macro-economic environment must be acknowledged as the most fundamental roadblock to the development and growth of a sector that drives progress in terms of much needed job creation, much needed foreign and domestic investment and much needed export earning potential.

Indeed, the lack of opportunities to invest is seriously concerning.

Market confidence

The absence of a sustainable and clear prospect remains a handbrake on general market confidence (and consumer spending) as well as the ability for the sector to trigger valuable (and long-term) downstream economic and social shared value.

There are direct practical considerations of this even for importers such as Audi, where - for example - the brand would seriously consider reinvesting in manufacturing capabilities in South Africa if the business case existed. As things stand, the capacity to produce exists but the business case simply does not. The ball is in the government’s court to address this.

As we move into a more positive 2018, the government also needs to address additional refining capacity and a wholesale improvement in overall fuel quality standards. Resolving poor petrol and diesel standards will add greater impetus to our ability to introduce even more models to this market and support a domestic automotive growth agenda.

Indeed, as we move into 2018, closing the policy gap to electrification presents a significant growth opportunity. With this in mind - we will become the first petrol brand to participate in the upcoming Sasol Solar Challenge using Audi eTron models as an opportunity to showcase the positive impact of electrification.

This acknowledges a broad-based need for the sector to fundamentally address its own role in what a mobility environment of the future looks like, even here in South Africa. Indeed, this is not just a global issue. Locally, there remains an urgent need to deliver structurally to enable better electrification and improved mobility.

Steps to address this will improve overall competitive performance for the country in terms of key drivers such as innovation, goods market efficiency and labour market efficiency.

There is no doubt that green shoots are evident in the local automotive environment, and that we can build a much bigger premium segment as a result.

The onus is now on all role players to come together to address the barriers to economic growth - only from there can we address the remaining structural areas that will undoubtedly grow one of South Africa’s most important segments.

Trevor Hill is the head of Audi SA.

-BUSINESS REPORT