The National Association of Automobile Manufacturers of South Africa [NAAMSA] plays an indispensable transformative role that contributes directly to the sustainable development of the country’s productive economy. The automotive industry is a major industrial and economic force that adds real value in people’s lives every day. Our members produce products and services that can move people, goods and services; products that can facilitate trade; create sustainable jobs for the economically active; serve our communities with their transport needs; create prosperity and provide mobility for the majority of people in South Africa.
- BRIEF COMMENT ON DECEMBER 2019 VEHICLE SALES
Industry domestic sales ended 2019 on a high note with aggregate industry new vehicle sales for December 2019 at 41 698 units, recording a welcomed uptick of 1 678 vehicles or a rise of 4,2% compared to the total new vehicle sales of 40 020 units during the corresponding month of December 2018. The December 2019 new passenger car market reflected a year-on-year volume increase of 9,1% but a decrease in the case of light commercial vehicles of 6,7%.
Sales of medium and heavy commercial vehicles had also improved, increasing by 19,0% and 18,8% respectively, year-on-year. On the other hand, sales of extra-heavy commercial vehicles had declined by 19,1% year-on-year.
Export sales had recorded a huge decline in December 2019 and at 13 298 units reflected a fall of 18 124 vehicles or a decline of 57,7% compared to the high base of 31 422 vehicles exported during December 2018. However, the industry surpassed the 2018 record figure after 11 months in 2019 already and for the full year 2019 achieved a record annual export sales figure of 386 863 units.
Overall, out of the total reported industry sales of 41 698 vehicles, an estimated 35 164 units or 84,3% represented dealer sales, an estimated 9,3% represented sales to the vehicle rental industry, 3,8% to government and 2,6% to industry corporate fleets.
- 2019 NEW VEHICLE SALES AND VEHICLE EXPORTS: ANOTHER CHALLENGING YEAR CHARACTERISED BY SUBDUED DOMESTIC SALES OFFSET BY SUBSTANTIAL GROWTH IN VEHICLE EXPORTS
Vehicle sales are linked to the strength of the economy and the new vehicle market in South Africa in 2019 continued the downward trajectory experienced since 2013, with the exception of 2017, when a marginal year-on-year increase was registered. Following the decline in new vehicle sales of 1,0%, in volume terms, in 2018 compared to 2017 – new vehicle sales had declined by 15 601 units, or 2,8%, from 552 227 units in 2018 to 536 626 units in 2019.
Domestic new vehicle sales in 2019 again had been affected by the subdued macro-economic environment, pressure on consumers’ disposable income and fragile business and consumer confidence. The lowering of the interest rate by 25 basis points during July 2019 has also not lent any significant support to the new vehicle market.
The decline in new passenger car and light commercial vehicle sales occurred despite the strong contribution by the car rental sector during the year and an improvement in new vehicle affordability in real terms. In an affordability-driven marketplace, market conditions 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. Growth in the medium commercial vehicle segment could be an indication that customers are buying down into smaller vehicles due to the prevailing challenging economic conditions in the country.
Although the domestic new-vehicle market was progressively declining in 2019, vehicle exports once again was on the rise showing substantial growth year-on-year. Vehicle exports had registered another annual record and total vehicle exports at 386 863 units reflected an improvement of 35 724 vehicle exports or a gain of 10,2% compared to the 351 139 vehicles exported in 2018. Exports of passenger cars, in particular, had registered a substantial gain, in volume terms, of 17,7%.
The momentum of export sales had continued in 2019 and, based on relatively strong order books reported by most vehicle exporters, exports were expected to reflect further growth in 2020 and subsequent years. The projection for industry export sales for 2020 was currently at 400 000 export units.
- INDUSTRY PROSPECTS FOR 2020: MODEST IMPROVEMENT AT BEST IN DOMESTIC NEW VEHICLE SALES VERSUS FURTHER RELATIVELY STRONG GROWTH IN VEHICLE EXPORTS AND DOMESTIC PRODUCTION
South Africa’s GDP rate too often found itself in negative territory during 2019. An improved economic growth rate of 1% and above for 2020 should translate into improved customer and business confidence as well as support new vehicle trading conditions. At this stage an improvement of around 2% in aggregate sales volumes year-on-year is projected for 2020. However, most automotive companies are planning their operations on the basis of a flat market in 2020.
Factoring in the expected improvement in exports, domestic production of motor vehicles in South Africa increased from 610 854 vehicles produced in 2018 to about 640 000 vehicles in 2019 and is projected for 2020 to reach about 660 000 units.
Risks and opportunities for South Africa remain in 2020. Downside risks for 2020 include the continuing load-shedding crisis by Eskom with ripple effects on the economy, Moody’s pending decision on South Africa’s investment rating as well as a continuing weak domestic economic growth outlook. On the positive side, however, the country’s inflation has declined to well within the target range of between 3% and 6% and the industry’s exceptional export performance is set to continue.
Best wishes for 2020 to the media and all automotive industry stakeholders.