Next year could see local auto industry regain some momentum

3rd November 2020 By: Irma Venter - Creamer Media Senior Deputy Editor

Next year could see local auto industry regain some momentum

Next year could see the local automotive industry regain some momentum in terms of domestic sales, exports and production, but it will not manage to claw back all of the losses recorded in a Covid-19-hit 2020.

The newest National Association of Automobile Manufacturers of South Africa (Naamsa) quarterly report indicates that the association expects production to drop by 31% this year compared with 2019, to 435 500 units.

At this point, the forecast is for production to only grow by 20% in 2021, to 521 700 units.

Exports are expected to drop by 31% this year, to 265 500 units, clawing back 23% in 2021, to 325 700 units

Naamsa currently expects the total new-vehicle market to decline by 31% this year, to 372 000 units, with growth of 17% forecast in 2021, to 435 000 units.

The truck market specifically is expected to decline by 29% this year, to 20 000 units, gaining only 5% in 2021, to 21 000 units.

The country’s economy remains in a fragile state, while business and consumer sentiment “is heavily depressed”, says Naamsa in its third-quarter report.

“Since new-vehicle sales are linked to the strength of the economy, expectations are for the domestic new vehicle market in 2020 to drop back to the levels seen two decades ago.”

Naamsa says that despite an anticipated rebound of the economy and new-vehicle sales in 2021, the growth outlook remains weak and the next six to twelve months will be “a defining time” for many automotive businesses in the country. 

Vehicle export numbers recorded steady improvement during the third quarter of this year, adds the association, but the performance year-to-date is still 37.6% down compared with the same period last year.

“Vehicle export recovery for the balance of the year will depend on the degree of recovery in the world economy and on the pace that lockdown measures are phased out in the domestic industry’s main export markets. 

“A second wave of Covid-19 infections in Europe, in particular, poses significant downside risks on the pace of recovery in domestic vehicle exports over the short to medium term.”