Amid dwindling domestic vehicle sales and the current recession, the South African automotive industry might have to rely on its export markets to carry it through the rest of 2018.
This view is supported by the latest vehicle sales statistics from the National Association of Automobile Manufacturers of South Africa (Naamsa) for August, released earlier this week.
In a statement, Naamsa said the sales of new cars and light commercial vehicles had been disappointing, while sales through exports had shown welcome growth compared with August last year.
New vehicle sales had de“Rising clined by 1,234 vehicles, or 2.5%, compared with the August 2017 figures.
Meanwhile, exports had increased by 2,317 units, or 7.7%.
Naamsa director Nico Vermeulen said all the manufacturers had recorded fairly good export figures.
“From now on, we’re anticipating good upward momentum in exports,” he said.
“It should continue to be strong for the balance of 2018 and into 2019.”
However, Vermeulen warned that exports were dependent on the condition of the global economy.
protectionism internationally and trade disputes [have] contributed to uncertainty and could result in lower global growth going forward.”
Naamsa has revised down its export projections for the industry to 340,000 units, from 366,000, attributing the decline to the time it takes for new models to enter the market.
“We had anticipated that the exports would show an upward movement at an earlier stage,” the association said.
“However, on the back of fairly strong order books, vehicle exports should improve over the balance of 2018 and reflect strong upward momentum in 2019, 2020 and subsequent years.”
Nelson Mandela University economist Professor Charles Wait said it would be difficult to predict global conditions for the rest of the year based only on August’s figures.
“These are short-term statistics, not an analysis of a trend over an extended period of time,” Wait said.
“[It says] nothing about the sustainability of either gains or losses.”
Wait pointed out that existing export contracts would likely stretch until the end of the year, which could help export performance.
Naamsa statistics painted a different picture of the domestic market.
New car sales declined by 2.2%, while the sales of light commercial vehicles, bakkies and minibuses were down by 866 units, or 5.8%.
Vermeulen attributed this to an unfavourable economic environment.
“The current sociopolitical discourse in South Africa was not conducive to uplifting business confidence and investment sentiment,” he said.
“The sharp decline in the latest Purchasing Managers’ Index is a source of concern and suggests a continuation of challenging business and trading conditions during the months ahead.
“As a result, conditions in the domestic new vehicle market [are] expected to remain under pressure over the short to medium term.”
The one positive point in August was a significant increase in truck sales.
There was an increase of 60 vehicles, or 9.3%, in the case of medium commercial vehicles, and, in the case of heavy trucks and buses, an improvement of 294 vehicles, or 18.8%.