File picture: Mercedes-Benz SA.
JOHANNESBURG - Forecast total vehicle production in South Africa has been revised downwards by 4.1percent or 26 050 vehicles to 609 000 units this year, because of a steep downward revision in forecast new vehicle exports.

The National Association of Automobile Manufacturers of South Africa (Naamsa) has revised its new vehicle export forecast for this year downwards by 7percent to 340 000 vehicles from its first quarter forecast of 366 050 vehicle exports.

Nico Vermeulen, the director of Naamsa, said in the association's latest quarterly review of business conditions in the new vehicle manufacturing industry for the second quarter of this year that export sales projections would be influenced by global growth forecasts currently at around 3.7percent.

However, Vermeulen said rising protectionism internationally and trade disputes had contributed to uncertainty and could result in lower global growth going forward and higher inflation.

Vermeulen said South African vehicle export numbers had been impacted by model run-outs and model run-ins as well as technology drive-train timing delays at one of the plants.

“As a result, annual industry vehicle export projections for this year had been revised downwards,” he said.

The model run-outs and run-ins relate to BMW shifting the production at its manufacturing plant in Rosslyn in Pretoria from the BMW 3-Series to the BMW X3 and Volkswagen’s production of the new Polo range at its plant in Uitenhage, Eastern Cape.

Vermeulen added that information provided by vehicle exporters indicated that order books remained fairly strong and consequently vehicle exports were expected to start improving over the balance of this year and to reflect strong upward momentum next year and 2020 as well as subsequent years.

Naamsa has forecast that total vehicle exports would increase by 11.5percent to 384100 vehicles next year from the revised forecast for this year and by 4.5percent to 402150 units in 2020.

This would contribute towards total vehicle production in South Africa growing by almost 8percent next year to 661600 units and by a further about 4percent in 2020 to 688150 units.

Commenting on the domestic new vehicle market, Vermeulen said South Africa’s economic performance in the first quarter of this year was well below expectation and the subdued economic environment continued into the second quarter.

Vermeulen said despite challenging trading conditions, domestic sales in the second quarter held up relatively well, with the car rental business contributing positively.

-BUSINESS REPORT