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Jul 27, 2012

Uncertainties about local vehicle exports remain

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Engineering|Africa|Environment|Ford|Africa|Europe|Algeria|Australia|France|Germany|Japan|South Africa|United Kingdom|United States|Automotive|Local Component Manufacturing|Manufacturing|Product|Service|Nico Vermeulen|Paul De Vantier|BMW 3 Series
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Despite uncertainties owing to the global financial markets, the National Association of Automobile Manufacturers of South Africa (Naamsa) expects vehicle export sales momentum to improve during the rest of the year.

Naamsa director Nico Vermeulen tells Engineering News there is uncertainty regarding South Africa’s vehicle exports, owing to the impact of financial difficulties in Europe, as well as softer growth and uncertainty in international markets in general.

He notes the industry’s export performance will remain a function of the direction of the global economy.

As South Africa remains an export- orientated industry, global economic developments have been and will remain an important consideration that impacts on the local automotive industry’s performance.

Vermeulen notes, however, that any slowdown in exports to the eurozone could be offset by higher exports into the rest of Africa and Australia.

He adds that local vehicle export sales momentum should improve during the rest of the year, as several vehicle export programmes, such as the Ford Global Compact Vehicle Export Programme and the new BMW 3 Series export volumes, have been ramped up.

In June, 27 061 vehicles were exported, a 7% increase compared with the 25 294 vehicles exported in the same month last year.

The Automotive Industry Export Council (AIEC) expects more than 270 000 units to be exported and for automotive export levels to reach R100-billion in value this year.

Automotive Production Development Programme
Meanwhile, the AIEC says government remains committed to fast-tracking the growth and development of the local auto- motive industry with its Automotive Production Development Programme (APDP), which will replace the Motor Industry Development Programme from January 2013.

The vision of the APDP, shared by government and industry, is to double vehicle production from about 600 000 units in 2006 to 1.2-million units by 2020.

The APDP will require substantial advances in terms of processes, competitiveness improvement, technologies and the scale on which the domestic industry currently operates.

The programme will emphasise local component manufacturing and seeks to shift the emphasis away from exports to achieving scale in the production of vehicles.

Further, government’s goal of creating five-million jobs by 2020 under the New Growth Path, as well as the National Planning Commission’s National Development Plan (NDP) aspiration to create 11-million jobs by 2030, will largely depend on the continuous successes of priority sectors, such as the local automotive sector, the AIEC’s Automotive Export Manual 2012 states.

The automotive sector is regarded as the leading manufacturing sector in South Africa, as it contributed 6.8% to the country’s gross domestic product last year.

Advantages
The South African automotive industry enjoys advantages compared with many other exporting countries. Its flexible production capacity, abundance of raw materials, government support, access to advanced technology and emerging- market cost advantages ensure the local industry increasingly adds value to the global market.

The AIEC report highlights that the current global economic environment is dominated by intense competition for export markets, investments and technologies, making it important for South Africa to gain and maintain access to export markets.

Vermeulen says the industry exported vehicles to over 80 destinations in 2011. This figure will increase to more than 100 countries this year on the back of the Ford Global Compact Export Programme.

“The top markets were the US with 68 948 units, followed by the UK with 43 688 units, Algeria with 24 191 units, Japan with 22 475 units, France with 13 549 units and Germany with 8 362 units,” he notes.

In 2011, the 272 457 fully built vehicles exported from South Africa comprised 68.8% passenger cars, 30.9% light commercial vehicles and 0.3% medium and heavy commercial vehicles and buses.

Sales
Engineering News reported this month that, according to the most recent Naamsa figures, all major vehicle segments had reflected solid sales growth during the first six months of this year compared with the corresponding period last year.

Local new vehicle sales improved to 51 891 vehicles, an increase of 15.6% compared with the 44 876 units sold in June 2011.

Sales for the first half of 2012 remained 10.5% ahead of the comparable period in 2011.

Assisted by new model introductions, passenger car sales at 35 918 units, improved by 4 480 units, or 14.3% compared with the 31 438 new cars sold during June 2011.

Market intelligence provider for the automotive sector and Naamsa’s data processing service provider RGT Smart CEO Paul de Vantier says, while local vehicle growth levels are expected to taper off, single-digit growth is expected for the remainder of the year.

“We are forecasting growth of about 6% this year; however, some of the recent strong growth in the vehicle market could be the result of consumers buying ahead and taking advantage of the reduction in real car prices over the last few years,” he says.

Meanwhile, Naamsa says, despite indications that the local economy is slowing down even more, new vehicle sales continued to perform remarkably well under the influence of factors such as historically low interest rates, ongoing improvement in vehicle affordability, continual new model introductions, as well as improving demand for credit by households and businesses sup- porting the local market.

Edited by: Chanel de Bruyn
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