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SA cars industry is driving ahead

Business Report
Driven by accelerating vehicle exports, South Africa’s automotive industry’s negative trade balance last year narrowed for the fourth consecutive year to its lowest deficit since 2012.

The industry had a trade deficit of R32.9 billion last year compared to R45.2bn in 2015, R62.2bn in 2014 and R63.8bn in 2014, according to the latest Automotive Industry Export Manual released on Friday.

The narrowing of the trade deficit was driven by vehicle exports valued at R118.1bn, which was offset by vehicle imports valued at R56.2bn for a positive trade surplus of R61.9bn.

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Automotive industry in South Africa. Photo: Simphiwe Mbokazi

However, automotive component imports valued at R147.8bn were imported into the country last year, with exports only worth R53bn, resulting in an automotive component trade deficit of R94.8bn.

Norman Lamprecht, executive manager of the National Association of Automobile Manufacturers of South Africa (Naamsa) and the Automotive Industry Export Council (AIEC), who produces the manual annually on behalf of the AIEC, said a record 344859 right- and left-hand drive vehicles, together with a diverse range of automotive components, were exported to 154 countries last year, with the export value to 52 destinations more than doubling on a year-on-year basis.

Lamprecht said a total of 110356 vehicles were exported to the UK, the top destination for South African vehicle exports.

He said catalytic converters, whose main purpose was to reduce harmful emissions from vehicles, remained the most popular component exported, followed by engines and parts, tyres and radiators.

Value

Lamprecht said the domestic automotive industry’s top export markets in value terms were Germany at R46.8bn, followed by the US at R22.6bn.

He stressed that the importance of trade arrangements that South Africa enjoyed with the European Union, which allowed for duty free vehicle and automotive component exports to the 28 countries in the region, together with the Africa Growth Opportunity Act trade arrangement with the US, enhanced exports to these countries.

Lamprecht said exports to Africa continued to perform relatively well, with exports to 38 countries on the continent amounting to R31.3bn last year.

However, the total value of exports into Africa was lower than the R34.6bn in 2015, although comparable with exports valued at R31.6bn exported to the countries on the African continent in 2014.

“Opportunities relating to the proposed ‘Cape to Cairo’ free trade area, including 26 African countries, as well as South Africa joining the Brics coalition along with Brazil, Russia, India, and China, would contribute to the domestic automotive industry’s export performance,” he said.

The manual said the launch of the Africa tripartite free trade area was followed by the initiation of negotiations around the establishment of a continental free trade area (CFTA) at the African Union in June 2015.

It said the CFTA, planned to be in place by December, would bring together 54 African countries with a combined population of 1.2bn people.

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