|Vehicle-tracking company Altech Netstar is taking dramatic cost-cutting measures amid soaring fuel prices.
Among other steps, the JSE-listed subsidiary of Altech plans to shift some of the cost burden to its clients, whose 500000 vehicles carry Netstarâ€™s tracking device.
â€œOur monthly subscription will increase by R4,â€ international and business development director Harry Louw said yesterday.
Netstar, which has 65 ground crews and 11 helicopters and fixed-wing aircraft for the recovery of stolen vehicles, spends heavily on petrol, diesel and jet fuel. â€œThe costs associated with our sophisticated and detailed recovery teams are extensive, and a very large portion of these costs are directly linked to the price of fuel,â€ Louw said.
Brent crude oil has skyrocketed from an average $28 a barrel in 2003 to an average $115 a barrel this year.
Over the same period, the crude-oil spike has boosted the average petrol price from about R3,83/l to R8,71/l and diesel from R3,26/l to R9,29/l , the South African Petroleum Industry Association says.
Isaac Matshego, economist at Investment Solutions, said the spike in global crude oil and the weak rand had been driving petrol and jet-fuel prices.
In a letter to customers, Netstar said the total increase would be R6 a month, effective from next month.
â€œThis equates to a R4 increase based on the increased cost of fuel, and an additional R2 increase to subscribers who have rental agreements, based on the increased interest rate,â€ Louw said.
The latest increase in the subscription rate is the second in a year that is part of â€œa variety of cost-cutting measures to weather this temporary downturnâ€, he said.
In March, Netstar raised rates 2%-8% depending on the product and tariff package .
Tracker, another vehicle- tracking company , looks set to follow in Netstarâ€™s footsteps.
â€œWe increase our rates annually in October and, for the past several years, these increases have been below the annual rate of inflation,â€ said Gareth Crocker, spokesman for Tracker, whose tracking device is installed in about 550000 vehicles.
Crocker said fuel costs were beginning to bite. â€œWhile it will always be significant in a contract-driven business, we have not experienced a disproportionate increase in the number of people cancelling their Tracker contracts.â€
Netstar said: â€œWe have experienced a small increase in subscriber churn, which we ascribe to the difficult economic conditions.â€
Matrix, a car tracker with 145000 subscribers, had also seen an increase in the number of clients who were â€œstruggling with subscription paymentâ€.
But Matrix had bucked the rate-increase trend.
â€œThe company hasnâ€™t increased rates in the past three years. We are not going to increase this year either,â€ senior marketing manager Hernus Vermeulen said. â€œThus far we have managed to contain our costs.â€
T he company did not bear the full brunt of fuel costs. â€œThe recovery team is outsourced.â€
Even so, vehicle trackers are worried about the shaky economy as â€œa lot of clients are feeling the pinchâ€, Vermeulen said.