According the National Association of Automobile Manufacturers of South Africa (NAAMSA), new vehicle sales in South Africa ended off 2013 on a sombre note as the year-on-year volume reflected a 0,9% decline in sales. December 2013 recorded only a small improvement on December 2012, with 46 501 units sold compared to the 46 406 new vehicles sold in the same month – a 0,2% improvement.
The rental industry had accounted for 9,3% of total sales and export sales recorded an improvement of 9,3% thanks to the 21 613 vehicles exported during December over the 19 768 units moved in December 2012.
Even thought the year on year growth figure for 2013 wasn’t spectacular, 2013 marked the fourth consecutive year of year on year gains. The expected 7,3% growth figure wasn’t reached primarily because of the slow economy, as well as above inflation average new vehicle price increases. An industry strike in the third quarter of the year also meant the production of 58 000 vehicles worth a total of about R11.6 billion was lost by the motor industry. In the event, aggregate sales grew by only 3,2% in volume terms. This compares to the annual growth in total sales of 24,7 per cent year on year in 2010, 16% in 2011 and 9% in 2012.
2013 turned out to be a year of relatively modest growth. However, sales of medium, heavy and extra-heavy commercial vehicles performed substantially better than the car and light commercial vehicle sectors.
Industry trading conditions remained intensely competitive with over 60 brands and about 2 200 model derivatives, in the new car and light commercial vehicle sectors, competing for consumers’ franchise.
Export sales were negatively affected by a seven-week strike in the automotive Industry from middle of August, 2013 through to the first week in October, 2013. As a result, aggregate 2013 total vehicle exports at 275 822 units were well down from the Industry’s original vehicle export projections of 336 000 units.
Naamsa anticipates that the key factor which will impact on demand and sales of new motor vehicles in 2014 will be as a result of, for the second year in succession, expected higher than inflation new vehicle price increases. The weakness in the Rand during 2013 against major international currencies – a depreciation on a trade weighted basis of over 20 per cent – has resulted in significant cost pressures in respect of imported content (used in locally manufactured vehicles) and imported vehicles.
Despite expectations of a difficult year, there were a number of positives that could lend support to the Industry. These included the low interest rate environment and the substantial ramp up in public sector infrastructure spending, the need for personal mobility and, in the case of the commercial vehicle segments, dependence on road transportation of goods and materials. Moreover, the stable automotive Industry policy framework provides manufacturers with certainty and predictability for investment and planning purposes.
Factoring in the expected improvement in exports, domestic production of motor vehicles in South Africa during 2014 was expected to rise from the approximately 550 000 vehicles produced in 2013 to about 611 000 vehicles in 2014 – an improvement in vehicle production of about 11per cent.
Overall, 2014 is likely to represent an extremely challenging year for the SA Automotive Industry. The Industry remains well positioned to continue to make a positive contribution to the South African economy, particularly as a result of higher expected export sales.