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South Africa Autos Report Q1 2010
Market |
Automotive and Parts |
Report Type |
Market Research |
Country |
South Africa |
Published |
22 January 2010 |
Number of Pages |
61 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
The South African automotive industry has suffered in the wake of the global economic crisis, with average production capacity usage reaching its lowest level ever in 2009. The sharp decline in capacity usage is a result of a drop in demand for new cars at home and abroad. That, in turn, has resulted in widespread job cuts and reduced output. While the worldwide economy is largely believed to have bottomed out, the recovery is expected to be slow.
New vehicle sales in South Africa continue to fall, but the decline is finally starting to slow. According to data from National Association of Automobile Manufacturers of South Africa (NAAMSA), total vehicle sales fell to 31,622 units in October 2009, reflecting a 16.9% year-on-year (y-o-y) drop. By comparison, sales in the previous month registered a sharper 22.4% y-o-y fall. NAAMSA added the average of daily new car sales was ‘relatively high’ for a third straight month, thanks to strong sales to the car rental industry, which made up 16.2% of total vehicle sales. The figures also suggest the start of a slow recovery for exports. In October 2009, exports fell 25.4% y-o-y, but they were up a significant 49.9% compared with the previous month.
However, the bus segment in South Africa has seen an increase in activity, largely as a result of contracts awarded in connection with the FIFA World Cup. In October 2009, bus sales were up by 51% from September, although still down by 25% on the previous year, based on data from NAAMSA. However, we expect the bus segment to account for just 0.5% of total commercial vehicle sales in 2009, which leaves the rest of the sector to be supported through alternative government measures. On the production front, some manufacturers are also taking a more upbeat view of the market. In November 2009, Nissan Motor’s South African subsidiary said that it was planning to raise production at its Pretoria plant to 45,000 units. The move is based on the carmaker’s aim to take advantage of new opportunities in the country's export market. Meanwhile, in Q309, General Motor Company (GM)’s president of international operations, Timothy E Lee, offered an upbeat forecast and predicted the vehicle market in South Africa would grow in 2010 after bottoming out by end-2009.
Also in November 2009, German carmaker Volkswagen was awarded a deal to export the new Polo from its plant in South Africa. The deal is worth ZAR27bn (US$3.6bn) over the next six years. According to Volkswagen South Africa (VWSA)'s managing director, David Powels, the deal is subject to exports remaining at 55,000 units per year for the length of the contract, compared with the 28,500 units that VWSA expects to export in 2009. VW is completing a ZAR3.5bn (US$451mn) overhaul of its Uitenhage plant to make way for the Polo. VW’s upgraded plant is expected to achieve high local content and the high output volumes needed to achieve economies of scale. At least five suppliers have established new facilities near VW's plant.
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