South Africa’s automotive industry sold 623 914 new vehicles in 2012, which was a 9.2% improvement on the 571 415 new cars, bakkies, trucks and buses sold in 2011, reported the National Association of Automobile Manufacturers of South Africa (Naamsa) on Wednesday.

Including sales of 7 794 units not reported officially by Chinese importer Great Wall Motors, total South African new vehicle sales reached around 631 700 vehicles in 2012.

This number signalled the third year of consecutive growth for the local industry, following record sales of 714 315 vehicles in 2006, and a subsequent three-year market decline through to 2009.

The 2012 passenger car market was up 11.3% on 2011 numbers, at 439 997 units. Light commercial vehicles grew at a more subdued rate, at 4.6%, to reach 156 170 units. The truck market also did not reflect the same enthusiasm seen in the car market, with medium commercial vehicles up 6%, to 9 816 units, and heavy trucks, extra-heavy trucks and buses up 2.8%, to 17 931 units.

Toyota was South Africa's best-selling vehicle brand in 2012 for the 33rd year running. Toyota's final 2012 sales tally was 121 276 vehicles, up from 109 413 units in 2011.

Naamsa said initial number-crunching indicated that the motor industry’s new vehicle-related sales turnover grew by 11% in 2012 to reach roughly R182-billion. 

Industry new vehicle export sales added a further estimated R52-billion to industry revenue.

Naamsa said the local automotive industry exported 277 844 new vehicles in 2012, a 3.5% increase over 2011, recording the second-highest export figure on record.

“Higher exports into African markets, China and Australia – particularly light commercials – more than offset lower new car exports into Europe,” noted Naamsa.

Exports were anticipated to expand significantly in 2013 to reach 361 300 units, an improvement of around 30%.

2013 Sales Expectation
Based on an assumption that the South African economy would grow by around 3% in 2013, Naamsa on Wednesday projected a 7.3% increase in new vehicle sales for the year.

“Prospects for the industry for 2013, at this stage, remain positive. However, volume growth is expected to be more subdued than the annual growth in total sales recorded over the past three years, namely, 24.7% year-on-year in 2010, 16.1% in 2011 and 9.2% in 2012.”

Growth was expected to be supported by historic low interest rates, improved vehicle affordability, new high technology model introductions, easier access for consumers to vehicle finance and continued strong replacement demand following record industry sales in 2006, noted Naamsa.

However, the association also warned that new vehicle demand could be derailed by rising inflationary pressures and the associated risk of upward pressure on interest rates towards the end of the year. Vehicle manufacturers and importers were also under pressure from the weaker rand, which meant the relatively modest vehicle price increases over the past three years might not be sustainable.

South Africa’s economic performance was also closely linked to that of Europe, the US and Asia, with the global economy still affected by financial difficulties in the euro zone.

Another worrying factor was the automotive industry wage negotiations set to start during the second quarter of 2013. Naamsa said these discussions would “hopefully result” in a new multiyear wage agreement without any disruption at production sites.

Factoring in domestic and export sales, the local production of vehicles in South Africa was expected to rise from around 550 000 vehicles in 2012, to about 650 000 units in 2013 – a healthy increase of about 18%.

The target set by government was yearly domestic vehicle production of roughly 1.2-million vehicles by 2020, supported by a new incentive programme, namely the Automotive Production and Development Programme (APDP), replacing the Motor Industry Development Programme (MIDP) that has been in place since 1995.

In contrast to the MIDP, which incentivised exports of vehicles and components, the APDP, coming into effect in 2013, aimed to add value in the production of vehicles for both the local and export markets. 

Fuel Prices Biting
Standard Bank vehicle and asset finance head Sydney Soundy said sales of diesel- and hybrid petrol-engine vehicles grew faster than petrol-engine sales in 2012.

He said there was an overall trend towards more fuel-efficient vehicles on the back of rising fuel costs. He noted that the inland petrol price had risen by 39.98% and the inland diesel price by 45.27% from January 2011 to December 2012. He said the impact of Gauteng tolling would also add to rising transportation costs.

Soundy said a shift towards affordable vehicles was also evident based on 2012 sales volumes in different price categories.

Standard Bank projected growth in new vehicle sales of 6% for 2013.

This was based, among other factors, on consensus among economists that South Africa’s economic growth would be muted at around 3.1%, and that there would be no significant improvement, if any, on personal disposable income levels.

Soundy added that the domestic new vehicle sales baseline set in 2012 surpassed the 600 000 figures last seen between 2005 and 2007, and that sales would also, therefore, be coming of a bigger base.