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Problems for South African car exports

While domestic new vehicle sales showed a year-on-year increase of 2.6% in South Africa, exports declined by a sizeable 11.5%, the latest data from Naamsa shows.

The National Association of Automobile Manufacturers of South Africa (Naamsa) New Vehicle Sales report for February 2023 recorded a year-on-year decrease in the export of vehicles and automotive components from 34,352 units in February 2022 to 30,409 units in February 2023.

Despite the drop in exports, however, domestic sales were up.

According to the association, domestic sales of new light commercial vehicles, bakkies and mini-buses increased by 683 units, or 5.5%, from the 12,289 light commercial vehicles sold in February 2022 to 12,972 units in February 2023.

Medium commercial vehicles had a negative year-on-year comparative growth from 517 units in February 2022 to 435 in February 2023, while the extra heavy truck segments of the industry showed a favourable performance from 1,186 in 2022 to 1,244 in 2023. This represented a decline of 15.8% and an increase of 4.8%, respectively.

The industry reported total sales of 45,352 vehicles – comprising dealer sales, rental industry sales, and sales to government and industry corporate fleets.

The breakdown of these four segments is as follows:

  • Dealers represented 83.6% of sales, with an estimated 37,091 units sold.
  • The rental industry represented 9% of sales.
  • Government sales represented 5.1% of sales.
  • Industry corporate fleets represented 2.3% of sales.

The automotive industry contributes 4.3% to South Africa’s GDP, Naamsa said.

Market forecast

Despite some of the numbers being positive for February 2023, the weak performance of the new vehicle market is in line with expectations of a depressed economy along with ongoing structural problems and cost of living increases, said Naamsa.

“The South African Reserve Bank’s decision to increase interest rates for the eighth time in a row is a reminder that South Africa, like much of the world, is still in the midst of an increased cost-of-living predicament,” it said.

Naamsa added that the current inflationary environment means consumer spending and household discretionary income continues to shrink with increases in fuel costs, electricity costs and many other essential costs that directly impact on vehicle sales decisions of our motorists.

Undoubtedly, the destructive higher stages of load shedding have also amplified the negative impact on South Africa’s vehicle production and component manufacturing, which has put pressure on the country’s export sector.

The association added that the National Treasury’s disappointing posture not to announce any support programme for the manufacturing of NEVs and NEV components in the country has also dampened the spirits within the sector.

“Load shedding is the biggest inhibitor to drive the industry’s localisation ambitions, create sustainable jobs within the auto sector and attract investment opportunities into the country further to grow the South African economy,” said Naamsa CEO Mikel Mabasa.

Despite the unpredictability in the new vehicle market, Naamsa noted that sales should still see an uptick in 2023.

“While momentum for the new vehicle market has been slow, it is forecasted that both domestic sales will grow by 6.3% and export sales will grow by 8.3% in 2023,” it said.

Source: business tech