Johannesburg - The automotive industry’s trade balance under the Automotive Production and Development Programme (APDP) was positive for the first time last year, with the industry recording a R5.3 billion trade surplus.
This follows the industry’s export value under the APDP surging by 31 percent to R151.5bn last year from R115.7bn in 2014.
The industry had an APDP-related trade deficit of R15.8bn in 2014 and R24bn in 2013.
Exports
APDP-related exports last year comprised “a significant” 14.6 percent of total South African exports of R1.037 trillion compared with 11.7 percent in 2014, according to the latest SA Automotive Export Manual, which was released last week.
The report is produced by the Automotive Industry Export Council (AIEC).
Imports under the APDP increased by 10 percent to R146.2bn from R131.5bn in 2014 and comprised 13.4 percent of total South African imports of R1.087trln compared with 12.1 percent in 2014.
The overall trade balance, which includes all automotive products and imported automotive replacement parts that are not linked to value addition in the country under the APDP, remained in deficit but narrowed to R45.2bn last year from R62.2bn in 2014 and R63.8bn in 2013.
Norman Lamprecht, the executive manager at the National Association of Automobile Manufacturers of SA (Naamsa) and compiler of the report, said this was a significant reduction in real terms.
The report said imported replacement parts increased by 15.3 percent to R55.4bn last year from R48bn in 2014.
It said the broader automotive industry, through its well-integrated value chain from downstream to upstream activities, contributed 7.5 percent to South Africa’s gross domestic product (GDP).
The vehicle and automotive component manufacturing industries accounted for 33.5 percent of total manufacturing output last year.
Lamprecht said South African automotive firms, in contrast to many other industries, had proven to be resilient against adverse economic conditions due to the high level of integration with domestic component suppliers, a stable policy framework and export diversification.
Success story
“Despite a number of macroeconomic headwinds faced in the domestic economy, exports of automotive products constitute the major economic success in the country,” he said.
The report said total domestic production, largely because of increased vehicle exports, was anticipated to rise by more than 40 percent this year in volume terms to about 640 000 vehicles from the 615 658 units produced last year.
Azar Jammine, the chief economist at Econometrix, said the automotive industry was one of the huge success stories of the manufacturing sector and was making a significant contribution to the economy.
“In the case of manufactured goods exports like motor vehicles, there is an immediate positive impact on values and volumes because of the rand’s depreciation.” he said.
“I think this is one of the reasons why we are seeing substantial investment in the automotive sector despite all the political nonsense in the country. I think motor manufacturers have taken a view that the rand will remain undervalued for the foreseeable future.“
The report said the local automotive industry was strengthening its global export footprint with export values to 30 countries more than doubling on a year-on-year basis last year. The number of export destinations with export values in excess of R1 million reached 140 last year, with 24 countries recording export values in excess of R1bn and 64 countries recording export values in excess of R100m.
BUSINESS REPORT