File image: IAA
Pretoria - A total of 1 900 jobs were lost in the vehicle manufacturing industry in the fourth quarter of last year.

This represented a decline of 6 percent in total employment by the industry to 29489 jobs on December 31 from 31389 jobs at the end of the third quarter.

Nico Vermeulen, director of the National Association of Automobile Manufacturers of South Africa, said employment levels in the fourth quarter declined fairly substantially, principally because of the lay-off of temporary workers at three major industry plants after stable industry employment over the past four years. The plants were not identified.

The latest quarterly review of business conditions in the new vehicle manufacturing industry released on Friday said an average of 30953 people were employed by the industry last year compared with an average of 31 260 in 2015.

The review said that with the exception of heavy commercial vehicles, capacity utilisation levels declined last year following the relatively high sectoral capacity utilisation levels recorded in 2015.

It added that capacity utilisation in the light commercial vehicle sector improved significantly in the fourth quarter.

Read also: New vehicle sales point to economic turnaround

Capacity utilisation levels for cars declined last year to 76 percent from 80.4 percent in 2015 while light commercial vehicle capacity utilisation dropped to 77.9 percent from 80.6 percent in the same period.

The review said capital expenditure by the vehicle manufacturing industry this year was expected to reach R8.17 billion compared with R6.4 billion last year and the record R6.9 billion in 2014.

Vermeulen said the high levels of capital expenditure in recent years and particularly future years may be attributed to investment projects by manufacturers in terms of the Automotive Production and Development Programme and associated higher levels of production for export markets.

He said the domestic new vehicle market continued to contract sharply on a year-on-year basis while the short to medium term domestic outlook remained of low economic growth.

Vermeulen said to expect double digit new vehicle price increases, because of earlier exchange rate weakness and vehicle production inflation last year together with relatively high interest rates, low levels of consumer and business confidence would further pressurise sales.

He said total new vehicle sales declined by 11.4 percent last year.

Vermeulen said that barring unforeseen political events and instability, new vehicle sales this year could improve modestly in volume terms on the assumption that the domestic economy would expand by about 1 percent during the year.

New vehicle exports improved by 3.3 percent year-on-year last year to 344859 units and were expected to improve by about 10 percent this year to about 375 000 vehicles, he said.