Automobile sector warns impact of KZN floods will reverberate
Billions of rands of destruction, but sales continue on road to recovery
SOUTH Africa’s automobile industry has warned that the shock of the KwaZulu-Natal (KZN) flooding disaster to domestic business conditions will reverberate for some time to come.
The devastating floods left a trail of billions of rand of destruction in KZN industrial areas, with Toyota South Africa Motors having to scrap hundreds of brand new cars that got flooded at its plant in Prospecton.
The National Association of Automobile Manufacturers of South Africa (Naamsa) yesterday said that as a result, the domestic automotive industry will be operating on a stop-start recovery for the duration of this year as a result of the floods and other preceding headwinds.
Data from Naamsa yesterday showed that aggregate domestic new vehicle sales rose by 4.3 percent in April from a year ago. The vehicle industry sold 37 107 units in April, reflecting an increase of 1 516 units from the 35 591 vehicles sold in April 2021.
Naamsa said export sales recorded an increase of 4 248 units, or 16 percent to 30 788 units in April, compared to the 26 540 vehicles exported during the same month last year.
It said vehicle sales continued their road to recovery in April buoyed by the export market in spite of supply chain disruptions in port, rail and road traffic as well as the temporary closure of Toyota SA.
Naamsa said the new vehicle market’s performance during the month, although dented by the impact of the severe floods in KwaZulu-Natal, remained in positive territory.
It said sales in the volume passenger car segment performed well, assisted by ongoing strong purchases by the vehicle rental companies, but the other segments of the market performed weaker.
“The number of public holidays normally provides fewer selling days during April which soften sales,” it said.
“However, in addition to the renewed impact of Covid-19, in particular in China, the global shortages of semi-conductors and the repercussions of the geo-political conflict with Russia’s invasion of the Ukraine, the added shock of the flooding disaster to domestic business conditions will be felt for some time to come.
“The domestic automotive industry is expected to continue a stop-start recovery in 2022 in view of prevailing Covid-19-related supply chain disruptions, insufficient stocks, and escalating energy and transportation cost increases.”
Naamsa said vehicle exports increased during April and prospects for 2022 remain optimistic on the back of further new locally manufactured model introductions during the year.
“However, the economic damage from the conflict between Russia and the Ukraine will contribute to a significant slowdown in global growth in 2022 and add to inflation,” it said.
“As South Africa’s automotive volumes are predominantly driven by export demand, the industry is highly vulnerable to changes in demand in export markets, in particular Europe and the UK.”