Johannesburg - Strong growth in the exports of locally produced vehicles is insulating the motor manufacturing industry and automotive workers from a slowdown in domestic new vehicle sales.
Total sales of new vehicles dropped year on year by 6.1 percent last month to 54 112 units, with passenger vehicle sales slumping year on year by 8.8 percent to 36 506 units.
Total year-to-date vehicle sales at 356 755 units are 2.5 percent lower and passenger vehicle sales at 131 656 units are 4 percent lower than in the same seven months last year.
However, locally produced vehicle exports grew last month by 24.4 percent to 28 291 units from the 22 736 units exported in July last year and year-to-date vehicle exports at 197 230 units are 41.8 percent higher than the 139 070 units exported in the period last year.
Nico Vermeulen, the director of the National Association of Automobile Manufacturers of SA (Naamsa), said yesterday that the production of vehicles for the export market was definitely insulating the vehicle manufacturing industry from any potential negative impact from the drop in domestic new vehicle sales.
Projected record
Vermeulen said vehicle exports for this year remained on target to improve year on year by about 20 percent to a projected industry record of about 330 000 vehicles for the year.
Employment levels in the new vehicle manufacturing industry grew by 1.8 percent, or by 542 jobs, in the first quarter of this year following the 1 478 jobs created in the fourth quarter of last year and the more than 850 jobs lost between the second and third quarter last year.
Naamsa said the increase in jobs was related to higher levels of vehicle production and anticipated growth in output this year, driven by expectations of strong growth in vehicles sales into export markets rather than the local market.
Vermeulen said the number of jobs in the industry had reduced slightly by 60 jobs since the first quarter and stressed that there was “not doom and gloom” in the industry.
“It’s buoyant and has a growing vehicle and component manufacturing sector.
“The (sales) base is relatively high and the industry is coming off a fairly substantial growth period,” he added.
Cyclical industry
“The industry is cyclical and moves up and down with the economy and is being negatively impacted by the weak economy, inflation pressures, affordability issues, the increased tax burden on individuals and rising interest rates, which tend to reinforce a more subdued economic environment,” Vermeulen said.
“The automotive industry remains one of the success stories in the economy on the back of its export performance.”
Vermeulen said franchised new vehicle dealers would take most of the strain from the slowdown in sales.
National Automobile Dealers’ Association (Nada) executive director Gary McCraw said there were no active staff reduction programmes among its franchised dealer members but people might not be replaced if they left and were not in a critical position.
However, he said that if sales continued to decline and this became a long-term trend it would have an impact on employment.
McCraw said Nada had about 1 360 members, which represent 80 percent of the franchised new vehicle dealers in the country and employed about 58 000 people.
He said the sales slowdown was not unexpected and Nada had forecast a 4 percent drop in new vehicle sales for this year while many other forecasts were for flat growth.
BUSINESS REPORT