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Exports drop sharply owing to C-Class ramp-up, strikes, protectionism

19th August 2014

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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South African vehicle exports dropped to around 116 000 units for the first six months of the year, down from the 147 600 units recorded for the same period last year.

The National Association of Automobile Manufacturers of South Africa (Naamsa) said in its second quarter business review, released on Tuesday, that vehicle exports to the major international regions recorded “fairly substantial declines”, with the exception of Europe.

Exports to Africa were down 20%, exports to North America declined by 36.4%, Asia was down 41% and Australasia 31.7%. Exports to Europe grew by 2.3%.

Naamsa noted that a significant part of the decline could be attributed to the lack of meaningful exports from the Mercedes-Benz South Africa (MBSA) plant, in East London, which geared up for the production of the new C-Class during the beginning of the year.

“With the production of the Mercedes-Benz C-Class reverting to higher levels with effect from July, 2014, the industry’s second-half export sales should show a substantial increase on first-half export numbers – probably by between 40 000 and 50 000 units.”

This said, however, MBSA did not export the old C-Class to Africa or Asia. These declines could only be attributed to other factors.

In Africa, said Naamsa, the decline could be attributed to sudden and sharp increases in import duties, levied by countries such as Nigeria and Algeria, working to protect and develop their own vehicle assembly industries.

Labour instability in South Africa over the last twelve months also played a role.

“Unfortunately the seven week auto industry strike during the second half of 2013, and the more recent industrial action in the South Africa metal and engineering industry, have severely dented the industry’s reputation and track record as a reliable supplier to international markets,” noted the Naamsa review. “As a result, some international export sales have been lost, and this is, in part, reflected in the lower export figures.”

Looking at the domestic market, the association said 2014 local sales were expected to decline by around 5% compared with 2013 figures.

“The main impact is likely to be in the new car and light commercial vehicle sectors. Consumer sentiment and business confidence remain under pressure. High household indebtedness and a weak employment environment continue to impact negatively on consumer demand.

“On the more positive side, ongoing recovery and fixed investment activity should support sales of commercial vehicles.”

Edited by Creamer Media Reporter

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