2008 - 2009
INDUSTRY OVERVIEW
While a host of positive and negative issues presented themselves during the past year - and despite the fact that our expectations have not always been met - we have had to remain positive and get on with business.
Issues including crime, poor service delivery, strike action, the challenge of compliance with certainnew legislation and the impact of corporate governance for example, have continued to place additional pressure on business in general. The reality is that we can no longer use history and past trends to predict or decide future business decisions.
To cite an example: 24 months ago, we were asked to predict the size of the car rental fleet for 2010 and we were confident in our estimation - based on the previous couple of years’ performance - that we would be running a fleet ranging between 80 000 and 85 000 vehicles. With 2010 almost upon us, we now know that we will, in all probability, only have some 60 000 vehicles on fleet by that time.
Whilst we tend to become more creative during tough timesand look how and where we can reduce the cost of doing business, our customers tend to become more demanding, -looking for the best deals while at the same time cutting back on their travel spend.
We have, however, seen positive growth in certain areas of the business. While demand for car rental continued to increase YTD August, T&K revenue grew by XXX, ADR byXXX o RXXX, Rental Days by XXXand rentals byXXX. Fleet decreased byXXX.
Operating costs increased with accidents being the biggest cost driver increasing by XXX at a cost of some RXXX to the car rental industry.
During the past year, a number of industry sectors have come under review in respect of regulation. We believe that now, more than ever, it is important for the car industry to drive industry standards through SAVRALA and self-regulate … rather than be subjected to regulation by government.
We strongly believe that our association needs to be more inclusive of smaller operators,that we could consider bringing industry-related associations and other fleet ownerson board.
The new annual subscriptions were presented to our members at July’s quarterly meeting and it is clear that other revenue streams must be investigated in order to make us less reliant on member subscriptions.
During the past year, subscriptions have increased substantially in order to fund the association’s operating costs. Fleet categories were reassessed and contributions revised which resulted in substantial increases for some members. The rental section now contributes 80% towards the overall costs of the association.
PROJECTS
SAVRALA has been involved in various projects this past year and much time and energy has been invested in building relationships with related associations and various governmental departmentsby serving on various committees and working groups.
- Traffic Fines
The issues surrounding traffic fines remain a challenge.
During the past year, the AdministrativeAdjudicationofRoadTrafficOffences’ pilot phase was rolled out in Tshwane and Gauteng under the management of the Road Traffic Management Corporation/Road Traffic Infringement Agency with the remaining provinces still issuing traffic fines under the Criminal Justice Act.The successful implementation of AARTO should see an improvement in road behaviour and a significant reduction in collisions and damage costs.
We remain constant in our engagement with the authorities on the basis that SAVRALA members are law-abiding corporate citizens and that it is in all of our best interest to develop a holistic and practical solution to the problem. We continue to argue the fact that our members are not the offenders and should not be held liable for the fines. Company proxies should not be harassed or arrested and vehicle licences and renewals should not be denied due to outstanding traffic fines. Furthermore, we need to reach agreement on ‘’when does liability end?’’
With fines being issued dailyunder the old system - as well as in line with the new AARTO legislation - our members are still faced with significant volumes of unresolved outstanding fines due to both lack of information and the authorities not re-directing them.
The number of traffic fines has increased to such an extent that over the past couple of years, most of SAVRALA’s members have had to appoint service providers to process their re-direction.
AARTO’s current pilot programme has shown that the car rental industry will not be able to comply with all the components of the new legislation unless the issues raised with the authorities are addressed and resolved.
At a meeting held with theRTMC 26th January, we again discussed the issue of liability and information required at time of re-direction. At that meeting we suggested that the only solution to the problem would be for our members to have access to the e-NATISsystem to enable them to interact electronically in real time with the authorities.
While SAVRALAmembers mandated the association to seek legal counsel on the way forward, it was then decided that a last attempt should be made to meet with the authorities. This meeting took place on 2ndJune and certain commitments were made by the authorities with the parties agreeing to meet once again within two weeks of the minutes being circulated. Despite several attempts, this meeting never materialised.
It was at this stage that CANCOM approached SAVRALA to become a member of their newly-founded association SAFTLA. After a presentation to our members at July’squarterly meeting, the NEC suggested that SAVRALA establish a working group to include other fleet owners and related associations including the AA, RFA and NAAMSA in order to address AARTO-related issues and engage with the RTMC and the authorities.
It was then brought to our attentions that CANCOM - purportedly representing SAVRALA and its members - had held a meeting with the RTMC on 16thSeptember. We were called to an urgent meeting with the RTMC and the Johannesburg Metropolitan Police Department where we were informed that going forward, the RTMC would only work through SAVRALA on any AARTO and related issues.
As we currently stand, our members face considerable potential liabilities for outstanding fines which urgently need to be finalised. In the Western Cape a considerable number of traffic fines have been withdrawn through legislativemeans and the concerted efforts of Johan Venter and CANCOM.
It has been confirmed that JMPD will withdraw old traffic fines up to July 2007. Fines issued under the Criminal Justice Act between 8th November 2008 and 12thFebruary 2009will be withdrawn by the JMPD due to the fact that they were not issued under the new AARTO system. It is the opinion of the JMPD that all other outstanding fines will remain in force. It has however been communicated that CANCOM has a process in place whereby the remainder of the fines issued under the AARTO system will be withdrawn. SAVRALA believes that the process currently underway with CANCOM should continue and that the way forward should be via the formation of a working group made up of related associations and other fleet owners.
The RTMC has suggested that an eNATIS platform should be considered and managed by SAVRALA on behalf of its members and has recommended this to the eNATIS team. The idea is that an interactive system would allow eNATIS to extract vehicle information from a member’s vehicle base and match this to a traffic fine. The system would then prompt the rental company’s system to provide their customer’s details which would mean that fines would be directly issued in the rental customer’s name negating the need for re-direction. This would save the cost of the registered mail required to re-direct and would also mean that the first notice would be sent directly to the driver of the rental vehicle enabling the authorities to be able to collect the fine monies 32 days earlier. The RTMC is also looking at implementing a system whereby foreigners renting vehicles would need to settle outstanding fines prior to their departure from South Africa.
- SAVRALA Statistics
New data in addition to historical data has now been captured on the new templates. The segmentation of business has proven to be very meaningful and it was mentioned recently that the inbound statistics have been used to look at the impact of the current world economic slow-down on travel.
The theft and hijacking statistics remain of considerable concern as they do not reflect the same scenario being presented at the monthly fleet risk meetings and members will now be required to submit audited statistics to Response Group Trendline at their respective financial year ends.
AVIS has obtained verbal confirmation from the Competitions’Commission that the SAVRALA car rental statistics are in line with their standards.Leasing Section members raised their concern about the leasing statistics and it was agreed that the Rental Section would seek written confirmation from the Competitions’ Commission for Leasing Section as well.
- SAVRALA Mobility Services Project
The pilot phase of the Mobility Services Project which has set out to train 750 chauffeur-drive drivers by 2010 was successfully completed at the end of June with a ceremony for the first graduates held on 17thJuly.
Payment from The Tourism, Hospitality, Sport Education Training Authority (THETA) has been delayed due to the fact that THETA has been subjected to a forensic auditin respect of alleged over-commitment to the THETA Learnership programme. The initial amount of R300 000 was paid out and Ikhaheng and Learncorp, the two service providers appointed, have been paid for the first phase of the pilot project. The invoices for the second phase are outstanding and the final documents to facilitate the second payment were submitted to THETA on 9th October.
As a result of our members’ having a tight staff complement, considerable difficulty was encountered in getting them to release staff to participate in the phase. It was agreed that as soon as the second payout is received from THETA and we are confident that the project will proceed, we will approach those members that currently outsource their driver requirements and roll out the project to these drivers with the balance recruited from the unemployed graduate base.
- Closed User Group Info Share
The closed user group meetings arehosted by Transunion and held every second month. Participation remains very positive and the meetings are well attended by industry members with Topnotch now also part of the user group.
New contracts and codes of conducts have been signed in line with the new Credit Act and the sharing of client information and Transunion’s legal team has confirmed that the SAVRALA info share group discussionsare in line with the Competitions’ Commission’s requirements.
Transunion has made presentations to SAVRALA members on the various products available to reduce and manage areas of business risk and is in the process of looking at developing a product to assist with the management of traffic fines. The NEC has approved an amount of R10000 for the upgrade of the info share database.
- Industry Fleet Risk Committee
The fleet risk meetings continue to be very successful and we have seen a great improvement in the participation and sharing of relevant information on crime related matters. Great relationships have been establishedwith the South African Police Services at OR Tambo Airport and also with the Tourism Safety Initiative - a Southern Africa Tourism Association project managed by Business Against Crime.
Although there is no mechanism to measure the success of this committee, the information shared by the participants hasshown that very seldom only one car rental company is targeted. As a result of this info-share platform, a number of rental transactions were stopped and thefts prevented. It was suggested that SAVRALA remains the body to co-ordinate these meetings and venues and that a person within the industrychair these meetings. While Dougie Douglas has been appointed the chair, it was agreed that due to the sensitivity of the information shared that no formal minutes would be taken. Informal notes for action purposes only would be taken.
At our last quarterly meeting, the Department of Home Affairs delivered a presentation and is keen to work more closely with our fleet risk managers and to assist with information to speed up investigations. The department has also agreed to appoint a designated person to assist our managers in respect of fraudulent identification documents and passports. A department official also shared more information in respect of e-Government (a platform to be introduced in the near future) whereby all travellers renting vehicles, staying in hotels and travelling by airwill be recorded, stored and used to identify persons with a risk profile prior to their entering the country.
- OEMs Participation and Technical Feedback Sessions
At a breakfast session held on 3rd October, SAVRALA’s OEM members again confirmed that the Manufacturer of the Year Awards are still regarded as a very prestigious event. It was agreed that though current economic conditions make additional funding extremely difficult, that the MOTY Awardsshould continue to take place. It was agreed that the event would be scaled down,that the OEMS’ would not be approached for additional sponsorship and that all members would pay R10000per table. The target was to market 31 tables and I am pleased to announce that we have achieved this.
It was agreed that an additional award for the most improved OEM be made in 2009.A suggestion was made that an award for the best car rental company be made by the OEMs but this was rejected by the NEC.
It was also suggested that a member representing the OEMs be co-opted to the association’s NEC and it was agreed that the most suitable candidate would be a NAAMSA representative. The OEMs were requested to send an official letter to NAAMSA requesting a suitable person to serve on the SAVRALA NEC. It was further agreed that this individual would be required to attend the four quarterly NEC meetings and that OEM members would forward suggestions and requests prior to these meetings to this representative in order for them to be included on the agenda.
The draft of the updated Fair Wear & Tear Guide for the Car Rental section was presented to the OEMs on 3rdOctober with a request for any changes and/or suggestions. To date we have not received any feedback and therefore accept that the document is acceptable to all and we plan to introduce it shortly.
The MOTY technical feedback sessions will be held on 24th November and SAVRALA’s car rental and OEM members are requested to make available the relevant people in a position to provide meaningful feedback.
Current, ongoing and new projects include:
- AARTO
- Industry Salary Survey
- Gauteng Provincial Government vehicle roll-call project
- Association statistics
- DME issues
- Closed User Group Database update
- Manufacturer of the Year
- Skills Developmment
- Sanral
- Useful Guide to Car Rental
- Standardisation of Car Rental Terms and Conditions
- 2010 Preparedness
TOURISM BUSINESS COUNCIL OF SA - CEOs Forum
The relationship between SAVRALA and the TBCSA has grown tremendously over the past couple of years and we recognise the TBCSA as the platform to engage with on government on issues affecting the tourism industry. SAVRALA serves on the management board of the TBCSA and we have a TBCSA CEOs Forum whereby we meet monthly to discuss industry issues.
For some time now, the Forum has been engaging with government to consult with the private sector on tourism-related issues prior to certain legislation being passed. The tourism industry is one of the key contributors to South Africa’s economyand the TBCSA has, for some time, been driving the request to have a Ministry for Tourism to focus on tourism related issues only and we were pleased with the appointment of Minister Marthinus van Schalkwyk.
In the short term, the minister has attended two meetings set up by the TBCSA to meet with tourism associations and address issues affecting the industry in a negative manner.
The minister acknowledged certain of these issues and agreed to assist by getting other government departments involved in order to resolve them.
The issues raised by SAVRALA included the constant problems being experienced with the Operating Licensing Boardand vehicle permits and the ongoing issues surrounding traffic fines and AARTO. We are pleased to be able to inform our members that Mr van Schalkwyk arranged a meeting with the Minister of Transport and we met with the two ministers on 28th September. Various tourism-related issues were discussed and SAVRALA’s issues surrounding AARTO as well as vehicle permitting were recorded.