EU dents car export growth

Crisis in key market crimps local recovery

DEPRESSED production volumes because of the debt crisis in the euro zone, which is a major destination for the country’s vehicle exports, is one of the biggest threats facing the new vehicle manufacturing industry this year.

This is because it will translate into lower capacity utilisation and a strong possibility of reduced employment, particularly in the automotive component supply chain because of the knock-on effects of lower production on orders placed with component suppliers.

Vehicle exports for the 11 months to November were at 254 325 units, which is still 17 percent higher than the 217 308 vehicles exported in the corresponding period last year.

The National Association of Automobile Manufacturers of SA (Naamsa) in its quarterly review of business conditions in the vehicle manufacturing industry released in November was also still projecting total exports for 2011 at a 281 000 units, a more than 17 percent growth on the 239 465 vehicles exported in 2010.

The EU in 2010 accounted for almost 33 percent of the total vehicle units exported, which were worth R37.8 billion.

However, locally built vehicle exports in November fell by more than 28 percent to 20 480 units from the 28 564 units exported in the corresponding month last year, and were also 20.5 percent lower than the 25 763 units exported in October last year.

It appears almost certain that vehicle exports for 2011 will be below the projected volumes forecast by Naamsa.

But Johan van Zyl, the president and chief executive of Toyota Motors South Africa, said that despite the drop in vehicle exports in November, exports should be measured over time before concluding there was a slowdown in international demand.

In November, Naamsa projected that vehicle exports this year would grow by almost 27 percent year on year to 356 200 units.

The association believed that total vehicle domestic production will increase to a record 640 200 this year from the projected 551 000 units produced in 2010.

The outlook for vehicle exports next year is therefore clouded in uncertainty.

Nico Vermeulen, Naamsa’s executive director, admitted as much when he stressed the direction of the global economy remained uncertain and international financial markets were characterised by extreme volatility and turbulence.

Vermeulen added that prospects of slower global growth, particularly in developed economies, could impact on industry export sales going

Naamsa’s forecast for domestic vehicle production this year