SA vehicle industry achieves R21bn positive trade balance

RECORD vehicle exports helped take South Africa’s car trade balance to a positive R21,1 billion in 2023 from R19,6 billion in 2022 – an increase of 7,6 percent.

Norman Lamprecht, chief trade and research officer at motor vehicle business council Naamsa, said on Tuesday vehicle exports have remained the key driver for the automotive industry’s healthy trade balance since 2008.

“Despite a constrained economic environment undermining the domestic new vehicle market’s ability to fully recover to pre-pandemic levels in 2023, record-high vehicle exports ensured that the automotive industry outperformed the rest of the manufacturing sector,” he said.

“As the largest manufacturing sector in the country’s economy, a substantial 21,9 percent of value addition within the domestic manufacturing output was derived from vehicle and automotive component manufacturing in 2023, while the broader automotive industry’s contribution to the GDP comprised 5,3 percent – 3,2 percent manufacturing and 2,1 percent retail.”

The industry has now achieved a positive trade balance since 2015, according to the annual Automotive Trade Manual, previously named the Automotive Export Manual, which was released this week.

However, the motor vehicle trade balance figures exclude aftermarket parts, which recorded a negative trade balance of R99,5 billion in 2023.

Automotive export revenue grew by 19,1 percent to a record R270,8 billion in 2023 from R227,3 billion in 2022.

Lamprecht said this could mainly be attributed to a record vehicle export performance, resulting in vehicle export revenue increasing by 29,9 percent to R203,9 billion in 2023 from R157 billion in 2022.

He said automotive component exports decreased by 4,8 percent to R66,9 billion in 2023 from R70,3 billion in 2022, which is in line with lower catalytic converter exports.

The value of automotive imports increased by 20.2 percent to R249,7 billion in 2023 from R207,7 billion in 2022.

Lamprecht attributed this mainly to the 34,3 percent year-on-year increase in the imports of original equipment components in 2023, which was to accommodate new model launches by some original equipment manufacturers (OEMs) in the domestic market.

Lamprecht said the objectives of the South African Automotive Masterplan (SAAM) 20212035 are to increase vehicle production to 1.4 million vehicles per annum by 2035 and raise localisation levels in SA-manufactured vehicles from an average of 40 percent to 60 percent by 2035, which will contribute to decreasing reliance on imported components in the future.

Exports to the EU, the domestic automotive industry’s top export region, increased to a record R147,1 billion in 2023, while exports to Africa, its second-largest export region, rose to a record R42,8 billion.

Lamprecht said given the high export expo- sure of the domestic automotive industry to the EU, legislation to ban the sale of new internal combustion engine (ICE) vehicles in the EU and UK by 2035 requires a speedy approach because of the required timeframe within which SA’s automotive industry must respond to this challenge. - Moneyweb