The National Association of Automobile Manufacturers of South Africa (Naamsa) has adjusted its forecast for the domestic new-vehicle market to 564 500 units for 2016, down sharply from the forecast of 622 500 units as reported in November last year, and the 598 200-unit market as predicted in January.
In its review of automotive market business conditions for the fourth quarter of 2015, Naamsa states that the truck market is expected to reach 28 500 units in 2016, as opposed to a forecast of 31 500 units reported in November last year, in the association’s third-quarter review.
The forecast for exports has also been adjusted, to 376 00 units, down from 386 100 units as reported in November. This number, however, still represents a new record for the local automotive industry.
Domestic production is now expected to reach 639 500 units, down from 674 600 units.
Local production reached 615 658 units in 2014.
Naamsa views the outlook for new-vehicle sales in 2016 as “unfavourable”.
The association says that low economic growth prospects, the likelihood of new-vehicle price increases well above inflation – as a result of the weak rand – and expectations of further interest rate hikes should all see 2016 consumer demand for new passenger cars decline sharply from the 415 000 units as anticipated in November, to a new level of 375 000 units.
Adding to this will be the current widespread drought, which is projected to reduce South Africa’s economic growth by around 0.3%, while the country’s mining and manufacturing sectors will also remain under pressure, adds Naamsa.
Despite this negative outlook, however, the association expects capital expenditure in the vehicle manufacturing industry to increase to R7.6-billion in 2016, up from R6.6-billion in 2015.
“The high levels in capital expenditure may be attributed to investment projects by manufacturers in terms of the Automotive Production and Development Programme and associated higher levels of production for export markets.”