Record trade surplus for car sector

South Africa’s automotive industry achieved its fifth consecutive trade surplus in 2019 and its highest level on record.

Subject to the global impact of Covid-19 and an anticipated weak domestic market, it is expected to improve its trade balance further in 2020, according to the latest Automotive Industry Export Council export manual.

Norman Lamprecht, executive manager: trade, exports and research at the National Association of Automobile Manufacturers of SA and author of the report, said the report was written before the impact of Covid-19 had become evident and the outlook for the domestic and global automotive industries had looked positive.

However, he said SA’s automotive industry could still achieve a trade surplus this year because vehicle exports and components might decline by 20% this year and imports by 30%.

Lamprecht stressed that the future was uncertain but the majority of South African vehicle and component export sales were to First World countries and comprised only a small percentage of the total sales in those countries.

He added that people would still buy vehicles, although they might buy cheaper models and the vehicles produced by SA-based manufacturers were part of the popular vehicle model ranges.

The industry achieved a trade surplus of R27.1 billion last year compared with a surplus of R16.8 billion in 2018 and R10.3 billion in 2017.

Lamprecht said vehicles remained the key driver behind the automotive industry’s healthy trade balance over recent years.

A record 387 125 vehicles worth a record R148 billion, along with a record R53.7 billion in automotive components, were exported to 151 countries in 2019.

Azar Jammine, chief economist at Econometrix, said the automotive industry’s positive trade balance was “very important”. Jammine said the motor industry is in an outstanding position to exploit the weakness in the value of the rand. – Moneyweb