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In difficult times customers need choice that doesn’t compromise on quality

By , Petrocam CFO
South Africa , 25 May 2022
Ridwan Gany, CFO Petrocam Lubricants.
Ridwan Gany, CFO Petrocam Lubricants.

South Africans are sitting with bated breath, waiting for the exact shape and size of the latest shock petrol price increase. Geopolitical factors have been compounded by the fact that the government's temporary tax break on fuel comes to an end at the same time. Drivers will expect to pay well over R3, and maybe even up to R3,70 more for a litre.

As we all know, the petrol price has a host of knock-on effects that will eventually find us all at retail shelves. Higher input costs will always be passed onto consumers who will then need to pay more for the same as their salaries are spread even thinner.

However, that’s just one side of the coin. The petrol and other related price increases affect inflation and so the Reserve Bank reacts by raising the repo rate. As we all know, the repo rate went up by 50 basis points recently and by all accounts it won’t be the last increase in this upward cycle. This rate increase affects a host of things, from the interest consumers will pay on mortgages all the way to the interest rates they get when buying a new car. Landlords and fleet owners will feel the squeeze and no doubt start passing that pain onto their tenants and customers. Again, we’ll ultimately feel it at the check-out counter.

We are in rocky waters. We are in no way heading for the end of the world, but make no mistake, times are going to become tougher before they become easier. However, this provides an opportunity for challenger brands to offer value to customers instead of more pain.

In South Africa, consumers have been tied to using parts and services of Original Equipment Manufacturers (OEM) companies. Right To Repair turns this around and says that consumers should have the right to use a service provider or product of their choice as long as they adhere to quality standards. The concept is sound. If two providers can offer the same quality service and parts, why should the consumer be forced to choose one over the other, especially in cases where the one being forced on them costs significantly more?

While Right To Repair should eventually open the door to hundreds of smaller service centres, it’s not just those servicing newer cars that battle the perception of price versus quality. For far too long there has been an unspoken perception that higher cost equals higher quality. The more something costs, the more value one gets, right? Not quite. What if a large company has numerous corporate layers and a host of input costs that a smaller player doesn’t? What if the smaller player produces a comparable product but is a much leaner organisation and so it can sell at a more attractive price?

Let’s be clear. There does come a point where cheaper does translate to inferior quality because not even the most efficiently run business can compete with an upstart that uses inferior quality materials.

Finding that sweet spot is an art as much as a science, but it is crucial because it provides options and alternatives. Petrocam’s experience in other African markets has made it clear that building market share on the value end of the economy with a high-quality product ensures the customers stay with you when economic conditions change.

This concept holds true for every stakeholder in the motor industry, whether it is a provider of lubricant products, batteries, tyres or services. Customers must have the freedom to choose and they must have peace of mind that if they are feeling the pinch and need to save, that they can do so without compromising on quality.

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