Naamsa predicts a major increase in local vehicle production in 2019 as it reveals some of the local industry’s biggest challenges and shares its outlook for the year ahead.
Following a minor improvement in new vehicle sales (1.9%) in 2017 – new vehicle sales declined by 1.0% from 552 190 units in 2018 compared to 557 703 units in 2017.
What are some of the biggest issues affecting the industry?
Naamsa: “South Africa critically needs to achieve higher economic growth to fulfil its potential, address the many challenges confronting the country in terms of development and employment and to deliver improvement in the quality of life.
“A higher economic growth rate is also essential to support higher domestic new vehicle sales volumes.”
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What about the year ahead?
Naamsa said: “At this stage, an improvement of around 1.0% in aggregate sales volumes is projected. However, most automotive companies are planning their operations on the basis of a flat market in 2019.
“Factoring in the expected improvement in exports, domestic production of motor vehicles in South Africa increased increase from 601 178 vehicles produced in 2017 to about 610 000 vehicles in 2018. An improvement in industry vehicle production of about 8.0% was projected for 2019 to reach about 657 500 units.”
Car sales in 2019
Naamsa predicts 558 000 vehicles to be sold locally compared to the 552 190 achieved in 2018. Last year, the organisation predicted 572 000 models sold.
SA car sales 2015 – 2018: info by Naamsa
Automotive production programme
The organisation adds: “Naamsa welcomed the announcement at the end of November 2018 by the Minister of Trade and Industry, Dr R Davies, to extend the Automotive Developmental Policy Regime from 2021 through the end of 2035.
“Despite the fact that the 2035 objectives of the programme are quite ambitious, the announcement should enable vehicle manufacturers and component suppliers to plan strategically for the future and to finalise investment decisions with confidence and certainty.
“At the commencement of the extended programme from 2021 onwards, the levels of support and incentives for vehicle manufacturers will reduce significantly and the only means for vehicle producers to recoup benefits will be through progressive and substantial increases in localisation – whilst remaining internationally competitive in terms of exports.
“Vehicle producers and suppliers will have to continue to work together to achieve sustained net cost reductions to ensure that the industry becomes more competitive internationally, to grow vehicle and components export business and to provide affordable products to the local market.
“Automotive companies remain determined to rise to the challenges of the Post 2020 programme which will involve incremental localisation, industrialisation and transformation throughout the Automotive Value Chain.”