An optimistic view of tough road ahead
INTERVIEW/ Mark Smyth spoke with Raimo Lehtio, MD of Scania SA about the market, challenges and alternative fuel vehicles
This year will not go down as a great year for the automotive industry in SA. Sales have declined at double digit rates in many sectors. So it is not the best year to take over as the MD of a truck manufacturer. Could be worse, of course — you could be posted to Brazil.
Raimo Lehtio has been the MD of Scania Southern Africa for about four months and while he admits there are challenges, he definitely prefers it here to his previous posting in Russia.
CHALLENGES
Already he has travelled to all seven markets in the region, many of which are facing challenges of their own. Half of Scania’s used trucks go to other African markets, but things are not so healthy in the new vehicle arena. Lehtio says that the company will deliver some big mining trucks to Zimbabwe in 2017 but says that “things are difficult there”.
He says there is growth in some of our neighbouring countries, but the markets are not as big as SA. The company has made recent investments in Mozambique in spite of currency and inflation issues, while the stability of the economy in Zambia is providing strong expectations for growth.
FOCUS
In SA, he says that the company will increase its focus on segments such as construction and mining, pointing out that the brand has 26 vehicle options for these segments. He says the company needs to cater for more multibusiness customers.
“Next year will not be easy. The market will not grow, but we intend to keep our position,” he says. That will involve raising the level of services and contracts and working to make customers more competitive.
He says that the market is currently seeing fleet renewals rather than genuine growth. Fleet deals are coming in, but this is mainly because customers cannot wait any longer due to the age of their fleet. He is also of the opinion that many companies are waiting to see what happens politically.
Lehtio is proud of the fact that Scania SA recently received its certificate as a BEE Level 5 contributor, but warns that with changes to the scoring system, the company will have to change suppliers to maintain its level.
That is one of many challenges he will face in his tenure. He, along with many other automotive bosses, stresses that political issues are affecting currency stability. He also says that the current drought is a bigger problem than may realise. “Many of our customers need water and people don’t understand how water affects the transport industry.”
He has also decided that Scania needs to be more professional when it comes to used trucks. He says the used truck market is up 30% in 2016 and it is vital to be even more competitive in this space.
Then there is technology, particularly when it comes to telematics and alternative fuels. “We are talking about alternative fuels with many customers,” he says, adding that there is “definite interest” in the market.
“We are the most developed company in terms of alternative fuels,” he says. Already Scania SA has locally assembled biogas buses for testing and Unitrans is already using Scania biogas buses. There is a biogas refuse truck operating in Cape Town.
“SA hasn’t utilised alternative fuel vehicles yet as much as they should,” he says. He is adamant that legislation needs to be addressed to cater for this side of the market.
What about electric buses for bus rapid transit projects? There are rumours the City of Johannesburg is looking at electric buses for its Rea Vaya programme. Is Scania having discussions with Joburg? “No, none at all,” says Lehtio vehemently.
CLEAN FUEL
When it comes to regular powerplants, he says that many companies are keen to move to EU5 engines, in spite of the issue of availability of cleaner fuels.
The big push is coming from urban distribution companies, with clean fuel more readily available in major cities.
Recently the firm revealed its new truck line-up, but he points out that we will not see the new models arrive in SA until 2019. “Customers are happy with the present truck,” he says.
“They will wait for testing in the local market.”
In spite of numerous challenges and a tough market, Lehtio says he is very excited about SA and its neighbouring markets. Besides, “it was dull in Russia”, he concludes.
IN SA, THE COMPANY WILL INCREASE ITS FOCUS ON SEGMENTS SUCH AS CONSTRUCTION AND MINING, WITH 26 VEHICLE OPTIONS FOR THESE SEGMENTS