South African automotive industry reports its third best performance ever

The South African automotive industry is a global, turbo-charged engine for the manufacture and export of vehicles and components.

Many of the major multinational firms use South Africa to source components and assemble vehicles for the local and international markets.

The sector is one of South Africa's most important, contributing at least 6% to the country's GDP and accounting for almost 12% of South Africa's manufacturing exports, making it a crucial cog in the economy.

With over 625,000 unit sales in 2012, South Africa will report their third best performance ever - behind only 2006 and 2007.

December sales saw a small increase as compared to December 2011 figures, with 46,016 vehicles sold making a 1.8% increase on 2011 sales.

Of the sales recorded in 2012, the passenger car market performed particularly well, achieving a 7.2% increase in sales year-on-year. This rise in passenger car demand can largely be attributed to the rental car industry, with car rental companies accounting for 14.3% of total passenger car sales.

Walking to work or relying on public transport are simply not options for most commuters, and (sub) urbanisation is having a positive impact on car sales. The rural population is in decline but the urban population is expected to grow by 3 million between 2012 and 2020.

For that reason, 28% of households own a car in South Africa but more than half do in the Western Cape. Similarly, consumer expenditure on transport is more than double the national average.

The automotive and components industry is well placed for investment opportunities. Vehicle manufacturers such as BMW, Ford (incorporating Mazda), General Motors, Mercedes Benz, Nissan, Renault, Toyota and Volkswagen have production plants in South Africa, while component manufacturers such as Arvin Exhaust, Bloxwitch, Corning, Senior Flexonics have established production bases here.

With these positive trends in mind, experts have projected a 7.3% increase in domestic vehicle sales for 2013, with the South African economy also expected to expand by 3%.

For more information on the South African automotive industry, see the latest research: South African Automotive Industry

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