Economic experts advise that by technical definition, South Africa has not entered into a recession. Most recently however, they are shifting gear after the results of the last quarter of 2008 when we witnessed a negative growth of 1,8% GDP. A recession is declared when a negative growth is encountered in two consecutive quarters in a year. Most South Africans have started tightening their belts with ever increasing food prices, volatile petrol prices and job retrenchments. Whether this is true or not, one thing is certain, these are signs of tough times ahead.
The automotive industry is one of the hardest hit by the economic turndown. The sales decline in the motor industry follows the same pattern in mature markets in the US and UK. The main international trends in the automotive industry observed globally include a lack of financial resources due to the banks’ reluctance to loan as a result of an increase in loan repayment defaults. This increases the risk for OEM that suppliers may fail and production stops. Automakers are left with no option but to cut production and staff. While the number of job cuts is higher in mature countries, South Africa has seen over 10 000 workers and still counting, being retrenched in 2008.
Under these circumstances, innovation can be one of the key successes for business survival during the difficult road ahead. Europ Assistance SA advises its clients to fine-tune their products to counteract the economic slump. Affirming this business approach, Europ Assistance Holdings’, Corporate Partnership Director, Stephane Aerts comments on Dashboard, the Europ Assistance Group Newsletter, that by offering ‘pay as you go’ products instead of solely ‘insurance premium’ based products, companies may offer a more financially attractive proposition to the consumer thereby partially preventing a drop in sales.
Europ Assistance SA, for instance, anticipates an increase of consumers with legal woes owing to defaults in vehicle loans and uninsured loss recoveries in the event of an accident. Chances of a lawsuit are higher at this time and product offerings should be mindful of this factor. Europ Assistance SA’s Motor Legal Care is a unique product for uninsured loss recoveries. The policy takes effect when uninsured losses or damages are caused by the negligence of a third party.
It is also expected that companies are on the move, meeting prospective clients and building new relationships at an attempt to rescue their companies. What could be worse than being late for such an important business meeting? Rouxlé van Molendorff, COO of Europ Assistance SA adds, “Our Directions Service as well as Trip Monitor are two of our products that are heedful of glitches that one could encounter while travelling short or long distances, and these products are designed to minimise this risk and save the consumers money.”
As someone once said; innovation is the ability to see change as an opportunity and not a threat. This is the time to be innovative.
