After a tumultuous 2013 riven by damaging industrial action, South Africa’s automotive trade body NAAMSA predicts that the country’s automotive sector faces a ‘difficult’ year ahead.
Export sales in 2013 were negatively affected by a seven week strike in the automotive industry from middle of August through to the first week in October. As a result, aggregate 2013 total vehicle exports reached 275,822 units, well down from the Industry’s original vehicle export projections of 336,000 units.
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Assuming further improvement in the global economy and projected higher exports to African countries, Asia and North America – NAAMSA says that total South African auto export sales during 2014 could improve by some 55,000 vehicles or about 20% over 2013. Total Industry exports are projected to exceed 331,000 units during 2014 increasing to about 381,000 units in 2015.
However, NAAMSA sees a flatter picture for the domestic market and said that the trading environment will be difficult due to price rises reflecting the impact of currency depreciation on imported parts. NAAMSA said that the weakness in the rand during 2013 against major international currencies – a depreciation on a trade weighted basis of over 20% – has resulted in significant cost pressures in respect of imported content (used in locally manufactured vehicles) and imported vehicles.
The South African economy is projected to grow by around 2.9% in 2014 and NAAMSA sees a broadly flat picture for domestic vehicle sales in 2014.
Despite expectations of a difficult year, there were a number of positives that could lend support to the industry, NAAMSA noted. These included the low interest rate environment and the substantial ramp up in public sector infrastructure spending. Furthermore, the trade body said that demand by the car rental industry is expected to remain strong during 2014 and should continue to make a positive contribution on the back of further expected growth in tourism and business travel.
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By GlobalDataFactoring in the expected improvement in exports, domestic production of motor vehicles in South Africa during 2014 is expected to rise from the approximately 550,000 vehicles produced in 2013 to about 611,000 vehicles in 2014 – an improvement in vehicle production of about 11%.
NAAMSA has said it aims for a domestic vehicle production figure of close to 1m vehicles a year by 2020. However, it noted that ‘one of the imperatives’ for that is industrial relations stability and close cooperation between employers and unions to “improve productivity and overall efficiencies and to reduce the widening cost gap between SA producers and international competitors”.
| South Africa | 2009 | 2010 | 2011 | 2012 | 2013 | 2014F |
| Vehicle sales (by sector) | ||||||
| Cars | 258,129 | 337,130 | 396,292 | 442,604 | 450,440 | 450,000 |
| Light Commercials | 118,159 | 133,756 | 149,301 | 160,174 | 169,234 | 170,000 |
| Medium Commercials | 7,229 | 7,557 | 9,218 | 10,104 | 11,595 | 12,000 |
| Heavy, Extra Heavy, Commercial Buses | 11,705 | 14,464 | 17,438 | 17,737 | 19,351 | 20,000 |
| Total Vehicles | 395,222 | 492,907 | 572,249 | 630,619 | 650,620 | 652,000 |
| Exports | 2009 | 2010 | 2011 | 2012 | 2013 | 2014F |
| by sector | ||||||
| Cars | 128,602 | 181,654 | 187,529 | 153,268 | 153,525 | 170,000 |
| Light Commercials | 45,514 | 56,950 | 84,125 | 123,648 | 121,095 | 160,000 |
| Trucks & Buses | 831 | 861 | 803 | 1,076 | 1,202 | 17,400 |
| Total Exports | 174,947 | 239,465 | 272,457 | 277,992 | 275,822 | 331,400 |
| Source: NAAMSA |
