New-vehicle exports from South Africa to the rest of Africa fell dramatically in the first eight months of the year.

Exports reached 32 080 trucks, bakkies and cars from January to August 2015, dropping a whopping 54% in 2016, to 14 723 units.

The decline follows a drop in exports from 78 787 units for the full year in 2013 to 61 839 units in 2014 and 42 594 units in 2015.

This year the number could be around 20 000 units.

South African vehicle exports to all regions of the world i, except Africa, increased in 2015. Europe, in fact, showed a 50% jump in exports, to 173 796 units, in 2015 over 2014.

National Association of Automobile Manufacturers of South Africa (Naamsa) executive manager Dr Norman Lamprecht says 2016’s sharp decline in African exports is, in general, the result of poorer economic growth in the rest of Africa, largely brought on by a struggling commodities market and low oil prices.
Oil-producing countries, such as Nigeria and Angola, have seen their income decline sharply, in line with oil prices, he notes.

Important, however, is that Algeria and Nigeria have also introduced changes in their regulatory environment, which have made it difficult to export new vehicles to these markets from South Africa.
Algeria, Kenya and Nigeria were South Africa’s top African export destinations in 2015.

Toyota, a major exporter into Africa, has also seen a model changeover this year, with the new Hillux bakkie introduced into South Africa and Africa. Model changeovers almost always result in a dip in production and exports, says Lamprecht.
A World Bank report, released in September, confirms Africa’s precarious state, noting that economic growth across sub-Saharan Africa is projected to fall to 1.6% in 2016, the lowest level in more than two decades. Growth was 3% last year.
The report says the weak growth mainly reflects the deteriorating performance of the continent’s largest economies, Nigeria and South Africa, which account for half the region’s economic output.

The report notes, however, that some countries, such as Senegal and Ethiopia, are posting yearly growth rates of more than 6%.
The good news is that the World Bank sees growth in sub-Saharan Africa rising to 2.9% in 2017.

Lamprecht believes Africa remains a lucrative market for South African exporters.

One reason is the growing momentum in the formation of trade blocs and free-trade areas on a rapidly urbanising continent that still has an ambitious, growing middle-class.
Also, the newly formed African Association of Automotive Manufacturers (AAAM) seeks to engage African governments to focus on the manufacturing and/or import of new vehicles, rather than the grey, second-hand imports currently swamping the market.
One of the AAAM’s most persuasive arguments is that no African country can start up a vehicle manufacturing industry while cheap imports flood local showrooms.

Last year, 1.55-million new vehicles were sold in Africa, says Lamprecht, and current estimates for used vehicles sales are six-million to seven-million.

“Every vehicle exported from South Africa creates a second market, namely for replacement parts,” he adds.

While built-up vehicle exports from South Africa are carefully noted and tallied, Naamsa does not yet keep track of semi- or completely knock-down kits (SKD or CKD) being exported from South Africa.

While not sufficient to skew the numbers yet, this may change in the foreseeable future, when South African carmakers hopefully export growing numbers of kits to assembly plants in the rest of Africa.
Already Nissan and Ford have assembly plants in Nigeria, supplied with kits from South Africa, with Volkswagen to open a facility in Kenya, also supplied with kits from South Africa.

“Africa is South Africa’s natural market and this must remain so,” says Lamprecht.

This means most of South Africa’s vehicle manufacturers are likely to keep their eyes firmly north, even though Naamsa agrees with the World Bank that Africa, as a collective, is unlikely to record healthy economic growth anytime in the near future.
“As in South Africa, economic growth in Africa will remain under pressure in the medium term,” believes Lamprecht.
While waiting for the return of the African market, South African vehicle manufacturers are, at least, reaping the rewards of growing exports to the rest of the world, brought on by government stimulus in the form of the Automotive Production and Development Programme, which has managed to attract record investments by vehicle manufacturers.
Naamsa expects new-vehicle exports to set a new record in 2016, improving on the one set last year, when exports reached 333 802 units.