Car industry sitting pretty
NATIONAL Association of Automobile Manufacturers (Naamsa) recently released its quarterly review of business conditions in the new vehicle motor manufacturing industry for the second quarter of 2018.
Despite individuals facing a tough time with personalised motoring, given the fuel price and rough economic times in general, the manufacturing industry is doing rather well.
Over the last few months we’ve seen loads of good news on this page, including large local investments from Mahindra and BAIC.
Ford is the latest member to join the club after a R3 billion investment in its Silverton plant earlier this year. The reason for this upgrade came to light recently when it was announced that the Silverton plant would be responsible for building the high performance Ranger Raptor, specifically for the European market.
This is not only a feather in Ford’s cap, but a compliment to South African assembly in general. It’s nice to know that the South African workforce is trusted enough to assemble vehicles for an audience as big and as focused on quality as Europe.
As for Naamsa’s report spanning the entirety of motor manufacturing in SA, the news is (for the most part) good.
Employment is down, but only by 0.23% or 72 jobs. Aggregate Industry employment as at 30 June, 2018 totalled 29 960, reflecting a decrease of 72 jobs or a decline of 0.23% compared to the 30 032 industry head count as at the end of March 2018.
The average monthly industry employment number for 2017 was 30 050.
Second quarter aggregate industry new car sales at 80 428 units recorded an improvement of 2 931 units or a gain of 3.8% compared to the 77 497 new cars sold during the corresponding quarter of 2017. Aggregate industry commercial vehicle sales during the second quarter of 2018 at 45 713 units recorded an increase of 830 units or a gain of 1.8% compared to the 44 883 units sold during the second quarter of 2017.
Despite challenging trading conditions, second quarter 2018 domestic sales held up relatively well with car rental business contributing positively.
The March 2018 0.25% interest rate reduction, surprisingly high consumer confidence and further improvement in new vehicle affordability with average new car price increases well below the inflation rate for the fourth consecutive quarter should provide support for domestic sales going forward.
According to Naamsa, prospects for the short to medium term suggest domestic sales could improve modestly by between 2% and 3% in volume terms.
South Africa’s exports are set to be influenced by global growth forecasts, which are currently around 3.7% but recent trade disputes mean there is a certain amount of uncertainty hanging in the air.
The export numbers have also been impacted by model run-outs and model runins as well as technology drivetrain timing delays at one of the plants. As a result, annual industry vehicle export projections for 2018 had been revised downwards.
Information provided to Naamsa by vehicle exporters indicate that order books remained fairly strong and that vehicle exports are expected to start improving over the rest of 2018 and going forward into 2019.
Top: The Ford plant in Silverton recently achieved an impressive milestone by building the 500 000th Ranger. Above: The Silverton plant will now be responsible for building Ranger Raptors for the European market.