Ve­hi­cle man­u­fac­tur­ers say an­other dif­fi­cult year lies ahead

The Star Early Edition - - BUSINESS REPORT - Siseko Njobeni

SOUTH African ve­hi­cle man­u­fac­tur­ers are brac­ing them­selves for an­other dif­fi­cult year for the do­mes­tic in­dus­try but ex­pected a mod­est im­prove­ment in the sec­ond half of the year, the Na­tional As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers of South Africa (Naamsa) says.

In a state­ment yes­ter­day, Naamsa said the 2017 pro­jec­tions re­flected an ex­pected im­prove­ment in gross do­mes­tic prod­uct to about 1.5 per­cent, up from 2016’s 0.4 per­cent.

“Im­prove­ment in growth prospects is premised on the eas­ing in drought con­di­tions, the im­prove­ment in com­mod­ity prices, a de­cline in in­fla­tion­ary pres­sures on the back of a stronger rand, as well as re­cent im­prove­ments in the pur­chas­ing man­agers’ in­dexes and the Re­serve Bank’s lead­ing in­di­ca­tor. On the neg­a­tive side, do­mes­ti­cally, el­e­vated po­lit­i­cal ten­sions are likely to con­tinue to weigh on busi­ness con­fi­dence and the ex­pected in­crease in taxes in this year’s bud­get will erode real pur­chas­ing power,” Naamsa said.

New ve­hi­cle sales fell 15.3 per­cent year-on-year to 41639 units in De­cem­ber, while ex­ports soared by 1222 units (7 per­cent) to 18668 units year-onyear, which is a con­tin­u­a­tion of the con­trast­ing per­for­mances be­tween the lo­cal and ex­port mar­kets.

Naamsa said sales of new pas­sen­ger cars were down 14 per­cent, while light com­mer­cial ve­hi­cle sales plum­meted 17.8 per­cent.

Sales of medium and heavy com­mer­cial ve­hi­cles de­clined by 18.2 per­cent in De­cem­ber last year, com­pared to De­cem­ber 2015.

It was the third year in suc­ces­sion that new ve­hi­cle sales recorded a year-on-year de­cline.

“The slow­down in the do­mes­tic econ­omy, above av­er­age new ve­hi­cle in­fla­tion­ary pres­sures, in­creases in in­ter­est rates, pres­sure on con­sumers’ and house­hold dis­pos­able in­come and low lev­els of consumer con­fi­dence had con­trib­uted to a dou­ble-digit de­cline in annual do­mes­tic sales vol­umes,” Naamsa said.

Naamsa said 2016 turned out to be “an­other ex­tremely dif­fi­cult” year for the South African au­to­mo­tive in­dus­try, with do­mes­tic new ve­hi­cle sales pro­gres­sively un­der pres­sure, par­tic­u­larly at dealer level, de­spite at­trac­tive sales in­cen­tives and a strong con­tri­bu­tion by the car rental sec­tor which ac­counted for an es­ti­mated 16.3 per­cent of new car sales dur­ing the year.

In­dus­try trad­ing con­di­tions had re­mained in­tensely com­pet­i­tive char­ac­terised by pres­sure on dealer mar­gins.

“Pre­lim­i­nary es­ti­mates of 2016 mo­tor in­dus­try new ve­hi­cle re­lated sales turnover in­di­cated a de­cline of about 2 per­cent, tak­ing ac­count of sales vol­umes, changes in mix and a weighted av­er­age es­ti­mated in­crease of about 14 per­cent in new ve­hi­cle prices – to reach about R233 bil­lion.

“In­dus­try new ve­hi­cle ex­port sales were es­ti­mated to have added a fur­ther R105bn to to­tal in­dus­try rev­enue in 201.”

The or­gan­i­sa­tion ex­pected ex­port sales to im­prove by 10 per­cent (30 000 ve­hi­cles) this year “as­sum­ing fur­ther im­prove­ment in the global econ­omy”. It said the im­proved per­for­mance by the ex­ports off­set “to a lim­ited ex­tent” the de­cline in do­mes­tic sales.

PHOTO: SIM­PHIWE MBOKAZI

South African ve­hi­cle man­u­fac­tur­ers are brac­ing them­selves for an­other dif­fi­cult year but ex­pect a mod­est im­prove­ment in the sec­ond half of the year.

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