WINDHOEK – New vehicle sales in Namibia and South Africa ended 2013 on a subdued note with aggregate industry new vehicle sales at 46 501 units, recording a small improvement of 95 vehicles or a gain of only 0.2 percent compared to the total new vehicle sales of 46 406 units during the corresponding month of December, 2012.
New vehicle sales are considered by many to be an excellent barometer of economic activity, consumer trends and general fiscal health. According to the National Association of Automobile Manufacturers of South Africa (NAAMSA), which records South African automotive sales figures in Namibia, Botswana, Lesotho, Swaziland and South Africa, the December 2013 new passenger car market and light commercial vehicle market both reflected a year-on-year volume decline of 0.9 percent. The car rental industry had accounted for 9.3 percent of total sales. In recently released figures NAAMSA said export sales had recorded an improvement during December and at 21 613 units reflected a gain of 1 845 vehicles or 9.3 percent compared to the 19 768 vehicles exported during December. Factoring in the expected improvement in exports, domestic production of motor vehicles in South Africa during 2014 was expected to rise from the approximately 550 000 vehicles produced in 2013 to about 611 000 vehicles in 2014, representing an improvement in vehicle production of about 11 percent. “The projected higher levels of vehicle production are consistent with the official vision for the industry, which is to remain a premier supplier of high quality, competitive automotive original equipment, parts and accessories and vehicles to international markets and, in the process, to achieve an annual domestic vehicle production figure of close to 1 million vehicles by 2020,” according to the NAAMSA report.
The association added that one of the imperatives for the successful realisation of the objective of new vehicle production in South Africa in excess of 1 million units per annum – was industrial relations stability and close cooperation between employers and unions to improve productivity and overall efficiencies and to reduce the widening cost gap between SA producers and international competitors. The global automotive industry continued to be characterised by sustained and relentless focus on efficiency improvements and cost reductions. “Overall, 2014 is likely to represent an extremely challenging year for the SA automotive industry. The industry remains well-positioned to continue to make a positive contribution to the South African economy, particularly as a result of higher expected export sales,” according to NAAMSA. For the fourth year in succession, new vehicle sales in South Africa recorded year-on-year gains. However, for 2013 new vehicle sales – primarily as a result of the slowdown in the economy coupled with above inflation average new vehicle price increases – came in well below original NAAMSA expectations of about 7.3 percent in domestic sales volumes for the year. In the event, aggregate sales grew by only 3.2 percent in volume terms. This compares to the annual growth in total sales of 24.7 percent year-on-year in 2010, 16.1 percent in 2011 and 9.0 percent in 2012. On balance, 2013 turned out to be a year of relatively modest growth, however, sales of medium, heavy and extra-heavy commercial vehicles performed substantially better than the car and light commercial vehicle sectors. Industry trading conditions remained intensely competitive with over 60 brands and about 2 200 model derivatives, in the new car and light commercial vehicle sectors. Preliminary estimates indicate that motor industry new vehicle related sales turnover had grown by about 11 percent, based on volume increases and a weighted average estimated increase of about 8 percent in new vehicle prices, during 2013 to reach about N$205 billion for the year. Industry new vehicle export sales were estimated to have added a further N$52 billion to total industry 2013 revenue.
Export sales were negatively affected by a seven week strike in the automotive industry from middle August 2013, through to the first week in October 2013. As a result, aggregate 2013 total vehicle exports at 275 822 units were well down from the industry’s original vehicle export projections of 336 000 units. Despite the lower export sales numbers, 2013 vehicle exports still represent the third highest annual industry export figure on record. A total of 284 211 vehicles were exported in 2008 and 277 893 last year.
“Assuming further improvement in the global economy and projected higher exports to African countries, Asia and North America, industry export sales during 2014 could improve by some 55 000 vehicles or about 20 percent over 2013. Total industry exports are projected to exceed 331 000 units during 2014 increasing to about 381 000 units in 2015,” according to NAAMSA.
NAAMSA anticipates that the key factor that will impact on demand and sales of new motor vehicles in 2014 will be expected higher than inflation new vehicle price increases.
“The weakness in the Rand during 2013 against major international currencies – a depreciation on a trade weighted basis of over 20 percent – has resulted in significant cost pressures in respect of imported content (used in locally manufactured vehicles) and imported vehicles,” NAAMSA’s monthly statement on new vehicle sales read. Despite expectations of a difficult year, NAAMSA reported a number of positives that could lend support to the industry.
These include the low interest rate environment and the substantial ramp up in public sector infrastructure spending, the need for personal mobility and, in the case of the commercial vehicle segments, dependence on road transportation of goods and materials. Moreover, the stable automotive industry policy framework provides manufacturers with certainty and predictability for investment and planning purposes.
Furthermore, demand by the car rental industry is expected to remain strong during 2014 and should continue to make a positive contribution on the back of further expected growth in tourism and business travel.
Meanwhile, the performance of exports would remain a function of the performance and direction of global markets. Signs were emerging of an improvement in the global economy. On a regional basis, recovering sales in the United States and continued growth in Asia, particularly China, represented the main drivers behind global sales.
Demand for light commercial vehicles in African markets was also expected to show above average growth. These trends are expected to support 2014 industry export sales.
By Staff Reporter