823 jobs lost but industry still rosy
GM decamps, sheds 589 jobs
THE VEHICLE manufacturing industry shed 823 jobs in the third quarter of this year, which was partly the result of retrenchments caused by the decision by General Motors (GM) to disinvest from South Africa.
This resulted in total employment levels in the new vehicle manufacturing industry declining by 2.7percent to 29533 at the end of September, from a 30356 headcount at the end of June, according to the latest quarterly review of the business conditions in the new vehicle manufacturing industry, released by the National Association of Automobile Manufacturers of South Africa (Naamsa) on Friday.
It said with the exception of the fourth quarter of last year and the third quarter of this year, industry employment had remained relatively stable over the past four years.
A monthly average of 30 953 people were employed by the vehicle manufacturing industry last year, compared with 31 260 in 2015.
The report did not specifically refer to GM, but said headcount declines in the third quarter were partly the result of retrenchments at a major Eastern Cape assembly plant.
GM South Africa in May this year confirmed that about 589 of its total workforce of about 1500 were expected to be affected by its decision to disinvest from South Africa.
The vehicle manufacturer said its decision to disinvest was based strictly on where it believed it could get the best return on investment.
In terms of the disinvestment plan, GM will stop the sale and manufacture of Chevrolet in South Africa by the end of this year.
Japan-based Isuzu Motors, through newly established company Isuzu Motors South Africa, plans to acquire GM’s light commercial vehicle manufacturing operations in Struandale in Port Elizabeth and continue manufacturing the Isuzu KB and medium commercial vehicles and heavy duty trucks in Port Elizabeth.
The Competition Commission last month approved this transaction.
A record capital expenditure by the industry of R8.17 billion was still projected by Naamsa for this year, following industry expenditure last year of R6.4bn, the third-highest annual figure on record.
The industry’s annual capital expenditure record stands at R6.9bn, set in 2014.
The review said the domestic automotive market had held up relatively well, despite the challenging economic environment. It said the new car and light commercial vehicle sectors in particular had benefited from improved new vehicle pricing, which had declined from 9.9 percent year-on-year in the third quarter of last year to about 3.1percent in the third quarter this year.
The reduction in interest rates in July, the highly attractive sales incentives, supplemented with above-average demand by car rental companies and growing replacement demand, as the age of vehicles on the road had extended, had also contributed to the modest improvement in sales, it said.
Naamsa anticipates an overall year-on-year improvement in total domestic new vehicle sales of about 2 percent to 558 200 units this year, from the 547 174 unit sales registered last year.
The association expects further modest growth in sales next year.
Naamsa said new vehicle exports this year had failed, for various reasons, to match original expectations, but might show good recovery next year on the back of positive global economic growth prospects.
Total vehicle exports this year were expected to decline by 4percent to 331000 units from the 344847 units exported last year.
In what it called “a conservative projection”, Naamsa at the beginning of this year forecast 10percent growth in new vehicle export sales to a record 375000 units. It is forecasting vehicle export sales of 366050 units for next year.