NAAMSA submits the following report on business conditions in the South African new motor vehicle manufacturing industry and the automotive sector during the third quarter of 2019.
1. EMPLOYMENT LEVELS AND TRENDS
The number of persons employed by the South African new vehicle manufacturing industry -comprising the major new vehicle manufacturers and specialist commercial vehicle and bus manufacturers – during the third quarter of 2019 may be set out as follows:
Industry employment levels and trends reflect employees on the payroll of vehicle manufacturers.
Aggregate Industry employment as at 30th September 2019 totalled 30 092, reflecting an increase of 361 jobs compared to the 30 118-industry headcount as at the end of June 2019.
The average monthly industry employment number for 2018 was 29 855.
2. NUMBER OF SHIFTS
Various manufacturers operate on a three-shift basis as well as multi-shifts in selected areas such as machining, press shops, paint shop operations and body shop.
Three manufacturers operate on a three-shift basis. Four manufacturers operate double shifts in specific areas.
3. AVAILABILITY AND PRICE TRENDS OF COMPONENTS AND RAW MATERIALS
3.1 COMPONENTS
Imported Components
The availability and supply of imported components remained stable during the quarter. Prices of imported components were negatively affected by exchange rate movements during the quarter with the Rand weakening against major currencies.
Local Components
During the third quarter of 2019, the availability and supply of locally produced components, in general terms, remained stable.
Third quarter component pricing generally remained in line with expectations and in line with producer price inflation.
3.2 RAW MATERIALS
Imported Materials
The availability of imported raw materials, where applicable, remained stable.
Pricing trends remain a function of exchange rate movements and the global price index.
Local Materials
Supply and availability remained stable but it was reported that exchange rate fluctuations caused parity pricing on the local steel grade.
4. UTILISATION OF PRODUCTION CAPACITY: 2014 – 2018 AND THIRD QUARTER, 2019
Average motor vehicle assembly Industry capacity utilisation levels, by sector and for the years/quarters indicated, may be illustrated as follows:
Capacity utilisation levels, during the third quarter of 2019, reflect the prevailing business conditions in the various industry segments in terms of domestic and export sales.
5. VEHICLE MANUFACTURING INDUSTRY CAPITAL EXPENDITURE: 2010 – 2018
NAAMSA reports the industry’s aggregate capital expenditure on an annual basis. The aggregated data is based on Capital Expenditure details supplied by the seven major vehicle manufacturers. Details of actual Industry capex for 2010 through 2018, in Rand millions, are as follows –
The high levels in capital expenditure are due to investment projects by manufacturers in terms of the Automotive Production Development Programme [APDP] and the projected higher levels of production
for export markets.
6. BUSINESS CONDITIONS, PERFORMANCE INDICATORS AND COMMENT
Business Conditions: Third quarter, 2019
2019 Third quarter aggregate industry new car sales at 91 580 units recorded a decline of 4 751 units or a fall of -4.9% compared to the 96 331 new cars sold during the corresponding quarter of 2018.
Aggregate industry commercial vehicle sales during the second quarter of 2019, at 49 086 units, recorded a decline of 48 units or a fall of -0.1% compared to the 49 134 units sold during the second quarter of 2018.
Analysis of the figures reflects a mixed picture compared to the corresponding quarter 2018 with particularly the consumer driven passenger car segment as well as the light commercial vehicle
South Africa’s Automotive Industry’s Performance in a Global Context: 2000 – 2018 Production data
Global new motor vehicle production in 2018 declined to 95 634 593 vehicles [2017: 96 671 427 units]. This represents a decrease of 1 036 834 vehicles produced or 1.1% compared to the 96.67 million new vehicles produced during 2017. South African vehicle production increased to 610 854 vehicles in 2018 from 601 338 units produced in 2017 – an improvement of 9 516 vehicles or +1.6%.
The following table reflects South Africa’s share of Global New Vehicle Production [in millions] –
South Africa’s share of global new motor vehicle production in 2018 amounted to 0.64% with the country’s ranking remaining at 22nd in the world. With regards to light commercial vehicle production South Africa was ranked 15th globally with a market share of 1.24%.
The current global vehicle population exceeds one billion vehicles. South Africa’s current vehicle population is around 12.46 million vehicles.
2019 Vehicle production is expected to expand to about 648 600 units
Vehicle exports into Europe, Africa, Central and South America reflected growth in 2018, with Europe on the whole dominating as a region. The increase in vehicle exports into Africa suggests that demand from the continent has stabilised and is starting to recover, albeit from a low base. Exports to North America declined substantially from 2017 to 2018, which could be attributed to the same BMW and Mercedes-Benz models ranges manufactured in the USA, which used to be the top export market for previous model ranges manufactured in South Africa by the two OEMs.
For the first nine months of the year vehicle exports remain well on track to achieve a new record in 2019 with exports running 47 050 units, or 18.8%, ahead of the same period last year. A record 351 139 vehicles were exported in 2018.
Brief Comment on business conditions and the medium-term outlook The new vehicle market continued to trend in a downward direction during the third quarter of the year compared to the corresponding quarter 2018 and the turnaround in the market, anticipated for the second half of the year, has not realised. New vehicle sales continued to mirror the negative sentiment as reflected by low business and consumer confidence levels in the country.
The lowering of the interest rate by 25 basis points during the quarter has also not lent any significant support to the new vehicle market. NAAMSA expects that consumers and businesses will continue to delay purchasing decisions on big items such as new vehicles until there is greater economic stability all around. Demand for domestic new vehicles, particularly the new passenger car market, therefore, would continue to remain under pressure over the medium term.
On the positive side, export sales had registered further strong gains during the quarter in line with industry expectations. Particularly noteworthy was the fact that the August 2019 export figure of 44 566 vehicles was the highest monthly total on record. Industry vehicle production levels would continue to benefit from strong vehicle export sales.
Also view:
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