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As South Africa braces for yet another fuel price hike and further interest rate hikes, it is already well-known that most sectors are feeling the economic pinch, and it is no different in the automotive industry broadly, and lubricants market specifically, says Petrocam Lubricants Operations Manager Hosni Adams.
Adams, who recently represented Petrocam Lubricants at the Automechanika expo in Nasrec, Johannesburg, says everyone is price sensitive.
“I met a large array of representatives from all parts of the automotive supply chain and I can say without doubt that price is the biggest pain point in the industry,” he says, adding that many he spoke to said they were bracing for tougher times as the year draws on.
However, as expected, while price is certainly the biggest concern to all players in the industry, all the way from OEM representatives to spare parts sellers, he says a recurring theme was the appetite for alternative brands.
“I had very senior people from a leading OEM brand in this country tell me they were at the expo to procure alternative products, and that’s exciting because a challenger brand has an opportunity to be noticed,” he says.
The other side of the coin, he says, is that he had very frank discussions with owners of workshops, and their mechanics, who complained that the oil they were currently using from alternative brands were of inferior quality.
“And so, as the event went on it became overwhelmingly apparent that our adjudication of the market has been accurate – of course people want a more attractive price, but quality is non-negotiable. Workshops and mechanics stake their reputation on the products they use,” he says.
Another recurring theme, and one which is found across industries, was concerns about gaps in the supply chain and availability of raw materials.
“There are a number of organisations looking to blend oils locally, however there is a risk that this compromises quality because of poor availability of quality raw materials,” he says.
The raw materials he refers to are base oils and additives.
“Where there is availability, the price is very high and so it makes the whole exercise futile for them,” he explains.
Linked to the supply chain constraints and the fact that many big distributors and workshop chains have been dropped by smaller brands, another recurring question at the expo was Petrocam Lubricants’ ability to guarantee supply in the face of logistics backlogs.
“Look, we definitely understand the concerns as it has been brutal out there. The fact we manage our supply chain from base oil to the actual delivery of product means we can guarantee this, whereas many can’t. At the end of the day there is a market that is desperate for quality products at palatable prices, and no matter how good the price and product is, if a business cannot supply the demand it is irrelevant.”
Petrocam Lubricants CFO Ridwan Gany says the Automechanika experience validated the company’s strategy of building market share when the economy is under pressure.
“We maintained from the beginning that while everyone is feeling the pinch, we are in a unique position with our lean organisational structure to put a stake in the ground and meet demand with reliable, and affordable supply. Based on our experience in other markets, we are certain that this strategy will secure loyal customers when the economy turns.
“Everyone wants a deal but no one wants an inferior product, and there’s no reason they should compromise,” he says.
