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Achiever Ray was spot-on about economy

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What do Jewish achievers expect for 2014 and beyond…

 

Raymond Levin, KIA Motors South Africa’s CEO, shared the Jewish Report’s 2013 Absa Unlisted Company Award with The Creative Counsel’s Ran Neu-Ner and Gil Oved

 

In a wide-ranging interview with Jewish Report last week, Levin – who was also recently awarded his third annual Zenneth Club accolade – KIA Motors’ distributor of distinction which is awarded to 20 out of 169 international distributors – shared his views on:

  • The motor industry’s 2013 results, and predictions for 2014 and beyond;
  • The impact of the Jewish market on the KIA brand;
  • His take on the crucial R:$ exchange rate
  • The impact the forthcoming elections will have on the economy;
  • The secret of his success: emulating Man-U;
  • Industry realignment in SA and vehicle price predictions;
  • Building the world’s first 100 per cent green dealership;
  • The future of the motor industry in SA and globally;
  • The SA economy going forward; and much more.

 

The state of the SA vehicle market

 

In 2013 South African local vehicle sales were up 3,5 per cent to 650 000 units, says Levin. For 2014, he predicts that the new vehicle market will remain static at the same figure.

However, he says, in 2014 he envisages a major realignment in the industry. “Used cars’ values and sales will increase while the new car market will be fairly stagnant. People who are buying new are buying down,” he told SAJR Online last week.

 

Levin’s success secrets

 

A fanatical Manchester United supporter, Levin is pining as his team is taking a pounding under a new management team.

However, when asked what he attributes his success in business to, Levin draws an analogy between former Man-United manager Alex Ferguson and himself: “Continuity, a corps of people who are loyal and a team of players who are able to execute a dream of building a brand.”

 
 Ray hit it spot on

SA economy and currency

Ray Levin was initially interviewed by the SAJR on January 13. As if he had a crystal ball, he

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made the following statement: “The serious decline of the rand/dollar exchange rate over the latter half of 2013 was a serious challenge to dealers – both manufacturers and importers – in terms of pricing. The rand is down by 30 per cent in 14 months.”

Referring to pricing, he said: “In everything in life there is elasticity – and in my view nothing is going to change until mid-2014.”

He believes the elasticity in pricing in the A, B, and C-segment (entry and mid-entry sized vehicles) has almost been reached.

“We’ll probably see R12/$ before we see R9/$,” he says. This has resulted in the prices of all makes having to excessively increase their new car prices this year, both in locally manufactured and imported vehicles, says Levin. This, in turn, will create even more challenges for manufacturers and importers in how they price their products this year.

That prediction was spot on.

About interest rates he commented on January 13: “Fortunately, however, low interest rates will help housing and car prices. These current low interest rates that we have are assisting to help stimulate retail sales in the housing and car industries. However, as with all good things, the low interest rates will also come to an end.”

Again, he proved to be spot-on with the Reserve Bank having hiked interest rates by 0,5 per cent just this week.

Labour costs and stability are also important issues in this, he points out.

Of course those involved in the vehicle export sector reap the benefits of the weaker rand.

“SA consumers are finding increasing cost pressure,” says Levin, who questions whether the stated cost of living increase of six per cent is a true reflection of the inflation rate.

“Consumer debt has increased significantly, to 75 – 76 per cent per household.” And, while he says this rate is comparable with other countries, “the middle class is under severe pressure to sustain our economy.”

The Absa Unlisted Company award

 

Asked if winning the award had been important to him, Levin answered: “To say it was important to win, no! But to say it was a huge honour and mitzvah to be recognised by the judges and the Jewish community, was a huge honour. It was a special time for me.” He felt “blessed” to be recognised by his own community.

“I was bowled over, I was stunned, I never expected (to win) the award. You don’t work to receive acclaims and awards.”

 

How it all happened for Levin

 

He feels he was at the right place with the right skills and at the right time. When the KIA brand became available in SA some 15 years ago, he snapped it up. At that stage he was importing the larger taxis that were at the heart of the government’s since-failed attempt to redesign the SA taxi industry.

Over the past 15 years, he says, KIA worldwide has taken off – so much so that they have been unable to produce as many new vehicles as the market wants. The parent company was taken over by Hyundai some years ago and has been building factories all over the world.

As the brand grew in SA (they now sell between 25 000 and 27 000 new KIAs a year), Levin sold out to the Imperial Group and stayed on as CEO. By 2013 KIA Motors SA had three per cent of the SA market and 72 dealerships – 40 per cent of which are owned and operated by KIA Motors SA and many of the remaining dealerships are also corporate-owned by major retail groups like McCarthy Motor Group and Combined Motor Holding (CMH).

While KIA Motors SA has no immediate plans to open new outlets, Levin is a forward-thinker: “We have acquired properties,” he says, which will be developed when the time is right.

 

Green dealership

Levin is especially proud of having opened the world’s first 100 per cent green KIA dealership in 2013. It is solar powered and collects its own water. It is not even attached to the water or electricity grids, says Levin with pride.

 

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The worldwide growth in demand for the KIA brand has put the parent company in the enviable position that its worldwide manufacturing capacity has lagged behind demand for their products.

“We agree a quota a year in advance,” explains Levin and “as the ship docks, the stock is shipped out”. Although KIA has production plants all over the world, all vehicles imported into SA must, by law, meet the stringent EU standards which are followed by the SABS. As a result 99 per cent of KIA Motors SA’s imports originate in Korean and Slovakian plants.

The announcement of a new factory with a capacity of anywhere between 300 000 and 600 000 vehicles, will alleviate production concerns for the late twenty-teens.

Ray is tight-lipped about if or where the new plant will be built. “If it was me making the decision, I would look at Brazil, due to their high import taxation.” If the plant is planned to produce for the global market, says Levin, Indonesia or India would be good calls.

He does say, emphatically, that KIA will not be expanding its production capacity in Korea (where it turns out some 1,2 million vehicles annually from its plants) due to rising labour costs and increasing labour militancy.

 

Worldwide trends

 

Levin says all vehicle manufacturers globally are building smaller engines and building them better, making cars and engines lighter by making use of material advancement so that the weight of vehicles has come down while safety continues to improve. “The whole dynamic of the global market is turning,” he says.

KIA has four manufacturing plants in South Korea: Hwaseong; Sohari in Gwangmyeong; Gwangju; and Seosan.

Their international production facilities span the globe: Malaysia, Slovakia, China, Vietnam, Russia and the US.

 

SA Jewry’s strong support for KIA

Says Levin: “Largely through people like Clive Blechman (CEO of the huge Eastvaal Motor Group) and his organisation, the SA Jewish community are huge supporters of the KIA brand.

“King David School,” he adds, “has started looking like a KIA dealership when parents drop off and collect their kids!”

The release later this year of the new Sedona will once again give KIA a seven-seat variant which is always popular with larger Jewish families.

Levin is an eternal optimist. He says the forthcoming provincial and national elections could play a significant part in stimulating the economy, both in the pre-election and post-election phases.

 

The future of South Africa

 

What he finds “very encouraging in South Africa, is that we, as a nation, are maturing. We can discuss politics more openly and more maturely. We have seen the rise of new political parties.

“For me there is definitely no doubt that the future (of SA) is in good hands and that the legacy of Mandela will definitely play a part in the years to come.”

There will still be a rocky path that we will have to follow the next few years, he says, “but eventually we will resolve our differences and have a true democracy that upholds our Constitution – which is absolutely paramount to the success of the future of this country”.

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