..:: AUTO REPORT AFRICA ::..
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The National Association of Automobile Manufacturers South Africa (NAAMSA) Tuesday described year 2018 as “a challenging year characterised by subdued domestic sales offset by growth in vehicle exports.”
The Association stated this in its review of 2018 new vehicle sales and vehicle exports in the country as it projected a modest improvement with a target of 385,000 units for exports in its outlook for 2019.
Describing the automotive sector as a major sector contributing around 7.7 percent to South Africa’s Gross Domestic Product (GDP), the Association noted that the automotive industry experienced contrasting fortunes in 2018 with domestic new vehicle sales and revenue in respect of new and used vehicles, as well as aftermarket parts and accessories, recording declines in real terms.
“In contrast, industry export business registered modest gains,” it however confirmed.
According to NAAMSA, “Following the modest improvement in new vehicle sales of 1.9 per cent, in volume terms, in 2017 – new vehicle sales had declined by 1.0 per cent from 552 190 units in 2018 compared to the total of 557 703 units in 2017. The annual decline reflected the weak macro-economic environment, pressure on consumers’ disposable income and fragile business and consumer confidence. The November, 2018 0.25 per cent increase in interest rates would also have impacted on new vehicle financing and sales.
“The fall in new car and light commercial vehicle sales occurred despite the strong contribution by the car rental sector during the year, attractive sales incentives by automotive companies and an improvement in new vehicle affordability in real terms. Current market conditions in the two sectors continued to be characterised by a buying down trend with sales of entry-level vehicles, small utility vehicles and crossovers performing well in relative terms. The premium car segment had continued to experience significant pressure. “
Summarising the annual aggregate industry sales by sector since 2014, NAAMSA said, “The annual sales should be viewed in context. Twelve years ago (2006), the domestic market recorded an all time high sales figure of 714 315 vehicles, of which the new car market had represented 481 558 units. In 2006 South Africa’s economic growth rate had been 5.6 per cent compared to the 2018 expected growth rate of less than 1.0 per cent.
Continuing, it said, “Interestingly, 2018 sales of medium and heavy commercial vehicles had recorded further improvement, in line with the trend over the second half of 2018, and the stronger sales suggested an improvement in capital investment sentiment in South Africa.
“2018 vehicle exports had registered an annual record industry export figure and total vehicle exports at 351 154 units reflected an improvement of 13 058 vehicle exports or a gain of 3.9 per cent compared to the 338 096 vehicles exported in 2017. Exports of light commercial vehicles and heavy trucks in particular had registered substantial gains, in volume terms, of 20.9 per cent and 17.6 per cent, respectively.”
Maintaining that projection for industry export sales for 2019 remained at 385 000 export units, NAAMSA said, “The momentum of export sales had increased over the second half of last year and, based on relatively strong order books reported by most vehicle exporters, exports were expected to reflect further growth in 2019 and subsequent years.”
It stated further, “At this stage an improvement of around 1.0 per cent in aggregate sales volumes is projected. However, most automotive companies are planning their operations on the basis of a flat market in 2019.
“Factoring in the expected improvement in exports, domestic production of motor vehicles in South Africa increased increase from 601 178 vehicles produced in 2017 to about 610 000 vehicles in 2018. An improvement in industry vehicle production of about 8.0 per cent was projected for 2019 to reach about 657 500 units.
“South Africa critically needs to achieve higher economic growth to fulfill its potential, address the many challenges confronting the country in terms of development and employment and to deliver improvement in the quality of life. A higher economic growth rate was also essential to support higher domestic new vehicle sales volumes.”
