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Africa|Aggregate|Automotive|Business|Energy|Environment|Export|Manufacturing|supply-chain|Manufacturing
africa|aggregate|automotive|business|energy|environment|export|manufacturing|supply chain|manufacturing-industry-term

Q1 recovery exceeds expectations – industry body

A vehicle in the manufacturing process hoisted up on a lift with a worker stood under the chassis

LIFTING IT UP The new vehicle market has outperformed expectations according to industry body Naamsa

29th July 2022

     

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Naamsa – The Automotive Business Council states in its ‘Quarterly review of business conditions: new motor vehicle manufacturing industry / automotive sector first quarter 2022 report’ that the pace of recovery in the domestic new-vehicle market outperformed expectations during the first quarter of 2022.

The positive performance could be attributed to pent-up domestic demand and improved business conditions aligned with the normalising economic environment.

However, the industry is expected to encounter a stop-start recovery over the balance of the year in view of prevailing Covid-19-related supply chain disruptions in China, insufficient stocks, and escalating energy and transportation cost increases.

The pace of recovery in new-vehicle sales outperformed expectations with aggregate new-vehicle sales recording an impressive increase of 18.0% compared with the corresponding quarter 2021.

The report also highlights that the first quarter saw new energy vehicle (NEV) sales by 12 industry brands increase to 1 401 units, exceeding total 2021 NEV sales of 896 units by a notable 56.4%.

Additionally, industry employment reflected an increase of 293 jobs to reach 32 001 positions at the end of March.

The average industry capacity use levels during the first quarter also reflected an overall improvement, although ongoing Covid-19 supply chain disruptions and geopolitical risks impacted the various segments differently.

Aggregate capital expenditure by the major vehicle manufacturers in 2021 recorded its second highest level on record at R8.8-billion.

South African vehicle production increased year-on-year by 11.8% in 2021, exceeding the modest year-on-year increase in global vehicle production of 3.1% in 2020.

Consequently, South Africa’s global vehicle production ranking improved to twenty-first in 2021, up from twenty-second in 2020, and its global market share increased to 0.62%, up from 0.58% in 2020.

First quarter domestic vehicle production reflected a modest increase of 1.3% compared to the corresponding quarter of 2021 and all segments, except for the light commercial vehicle and the low volume bus segments, reflected increases in line with higher new vehicle sales and increased economic activity during the quarter.

First quarter vehicle exports declined by 1.2% compared to the corresponding quarter 2021 as the repercussions of Russia’s invasion of the Ukraine hampered export volumes to key markets, in particular Europe.

The Naamsa CEOs Confidence Index, an in-house leading business confidence indicator of current and future developments in the domestic automotive industry, reflects a degree of bullishness in the sentiment expressed by Naamsa CEOs for the first quarter 2022 compared to the first quarter 2021.

The Naamsa CEOs remain confident that, despite the prevailing Covid-19-related supply chain disruptions as well as the geopolitical conflict with Russia’s invasion of the Ukraine, the gradual recovery in the domestic and global automotive industry will continue to support the industry’s key performance indicators over the next six months, albeit at a slower pace.

The domestic automotive industry remains resilient as well as geared for opportunities that continuously arise while adapting to the changed environment.

Edited by Zandile Mavuso
Creamer Media Senior Deputy Editor: Features

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