Car makers add jobs and spend more on expansion

Published May 16, 2013


Roy Cokayne

Employment in the motor manufacturing industry has increased to its highest level in four years, and capital expenditure by vehicle makers this year is projected to reach the second-highest level on record.

Total industry employment levels rose by 140 jobs to 30 299 positions at the end of March, the highest industry employment level in the past four years, the latest quarterly review of business in the vehicle manufacturing industry released by the National Association of Automobile Manufacturers of SA (Naamsa) showed yesterday.

The review noted that the 140 additional jobs followed the creation of 780 jobs in the fourth quarter of last year.

Nico Vermeulen, Naamsa’s executive director, said employment levels were expected to increase further as a number of manufacturers ramped up production for export markets.

The review said an average of 29 180 workers were employed monthly last year compared with 28 292 in 2011. The increased employment occurred despite a substantial decline in average industry capacity utilisation in the first three months of the year, with one manufacturer reporting “very low” capacity utilisation levels for the quarter.

Naamsa said this contributed to a sharp reductions in industry-wide capacity utilisation.

Average utilisation of new car production capacity was 78.2 percent in the first quarter compared with 86.5 percent for the 2012 calendar year, while only 69.1 percent of the new light commercial vehicle production capacity was used on average, down from 87.8 percent last year.

The review said capital expenditure was projected to reach R5.2 billion this year, the second highest level after the R6.2bn invested in 2006. The industry invested R4.67bn last year.

Vermeulen said the relatively high levels of capital expenditure in recent years could be attributed largely to investment projects by manufacturers seeking to take advantage of incentives in the Automotive Production and Development Programme.

The overall automotive industry contributed an estimated 7 percent of South Africa’s gross domestic product last year, an increase from 6.8 percent in 2011, he added.

This estimate was being validated by economics consultancy Econometrix, but took account of the value addition in the broadly defined automotive sector and covered vehicle retail, distribution, repairs and servicing, automotive parts production and vehicle production, including exports.

The review said vehicle production volumes increased by 1.3 percent last year to 539 000 units from 533 000 units in 2011, but it lagged the 5.3 percent growth in global production to 84.14 million vehicles last year from 79.88 million in 2011.

This reduced South Africa’s share of global new vehicle production to 0.64 percent last year from 0.67 percent in 2011. The share of global vehicle production reached a record 0.85 percent in 2006, when 588 000 vehicles were produced in South Africa.

However, the review said South African vehicle production was expected to grow by about 18 percent to 640 000 units this year. If such growth materialised, it should outstrip the expected growth in global vehicle output.

South African-produced vehicle exports were projected to increase by almost 30 percent to about 361 000 vehicles this year from the 277 893 units exported last year.

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