Record exports, but new unit SA sales decline
Africa’s largest carmaker is projected to ship 391900 vehicles this year, up from the record 387125 units in 2019, Naamsa said in its 2019 fourth-quarter industry report. The surge in exports would potentially offset the continued decline in domestic new vehicle sales, which were expected to fall to 525500 units from 536611 in 2019.
Demand for new vehicles has been hit by recessionary economic conditions and depressed consumer and business sentiment in the country.
“The new vehicle market is expected to face further consolidation, until South Africa breaks out of its low-growth trap and the economy is put on a higher-growth path,” said Naamsa chief executive Michael Mabasa.
Naamsa expected the economy to expand by 0.8percent in 2020, and consumers were likely to continue to buy cheaper models or delay purchasing decisions until there was greater economic stability.
The economy hasn’t expanded by more than 2percent annually since 2013, and the government doesn’t see it reaching that level by 2022.
Fourth quarter 2019 industry employment reflected an increase of 187 jobs to 30666 positions at end December, the report showed.
Industry capacity utilisation levels in the fourth quarter continued to reflect the prevailing business conditions, with the passenger-car capacity utilisation enhanced by higher production to accommodate record vehicle exports. Vehicle manufacturers spent the second highest capital expenditure on record in 2019 at R7.27billion.
Global new motor vehicle production in 2019 declined 5.3percent to 91123747 vehicles, compared with 2018. However, South African vehicle production increased by 3.6percent to 631983 vehicles in 2019 from 610060 units produced in 2018.
South Africa’s share of global new motor vehicle production in 2019 improved 0.69percent from 0.64percent, with the country’s ranking remaining at 22nd position in the world. In light commercial vehicle production, South Africa ranked 14th globally, with a market share of 1.26percent.
Vehicle exports into Europe, and North and South America reflected growth in 2019. Europe accounted for 73.8percent of total vehicle exports.
“Africa remains a priority focus for the domestic automotive industry and the low motorisation rate on the continent, growing middle-class and the African Continental Free Trade Area should stimulate future demand, albeit from a low base,” Naamsa said.
Exports to North America had declined substantially since 2017, attributed to the same BMW and Mercedes-Benz ranges manufactured in the US, once the top export market for previous models made in South Africa.