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What’s in store
for us in 2007?

Surprise! After the end of year break, I didn't know that the Rand/Dollar exchange rate in the commercial vehicle sector had deteriorated so badly!

One American truck manufacturer whose "sleeper" cab was R295 000 excluding VAT shortly before Christmas (I have a parts estimate as proof) is now R397 000 excluding VAT - with not a blink of an eye to justify the price hike. After a considerable amount of sparring, it was reduced to the region of the R340s. The poor old exchange rate got blamed again- note the original 34% price increase!

What is my point? Consumers - for whom we have bleated forever in the past about price imparities - should, if my prediction proves accurate, brace themselves for some serious parts price increases. The reality is that the holding costs of these large baskets of parts for the numerous variations in all manufacturers and models will cause stock holding costs to soar.

Congestion
The next Gauteng based change for 2007 is congestion. Not only are there many more cars on the roads - in fact, a very healthy indication is that - but have you noticed recently that many of the highways have "short term" expanded lanes. What I mean is that if a highway was designed for three lanes, a fourth has been squeezed in by narrowing both the emergency lane and the fast lane shoulder.

The result? When a vehicle or vehicles break down, this causes massive congestion just because of people's inability to negotiate the broken down obstacle. One just has to witness the "double decker" section of the M1 or the Woodmead area of the M1. Many more examples come to mind. The solution would be to have tow trucks permanently on contract to remove said offending objects.

Speed escalation
Most of you would have read the major Insurers comments on their motor accounts. The motor accounts are the specific divisions that house any "motor" insurance, commercials and cars.
I paraphrase the predictions that claims are set to soar especially in respect of motor.

One of the reasons for this in Commercials is what I call the "speed escalation discipline". A couple of years back, operators were pushing boundaries running in the 90 to 100kms/hr band. It was even still frowned upon. Now, because so many operators have exceeded this "comfort" zone and because so many vehicles are so easy to drive at speed, this band has slipped into the 100s. The result: Momentum! Watch!

Finally, this month's question. 
Please can somebody inform me how traffic congestion (two examples) on the M2 West towards Main Reef Road and secondly, south from Alrode through to Gillooly's is going to be solved by the Gautrain? Just curious to know! 

  

By Chris Barry, CEO of HCV Underwriting Management