Good news: SA car exports are racing to a record


Vehicle exports from South Africa, the continent’s largest automaker, could reach a record R140 billion in 2019, partially offsetting a drop in domestic sales.

The value of car shipments was R127.5 billion in 2018, when the industry exported just over 351,000 vehicles. The country is expected to ship around 388,000 units this year as assemblers including Ford Motor Co. up production, according to Renai Moothilal, executive director of the Automotive Industry Export Council and chairman of the National Association of Automotive Component and Allied Manufacturers.

Almost 19% more vehicles were exported in the nine months through September, compared with the previous year, data from the National Association of Automobile Manufacturers of South Africa show.

Export Uptick

Vehicles, ranging from passenger cars to trucks and buses were shipped to 155 countries in 2018, up from 149 in the previous year. Daimler AG’s Mercedes-Benz C Class set the pace for passenger car and light commercial vehicle shipments, with more than 90% of locally produced models destined for export, said Mike Mabasa, chief executive officer of NAAMSA.

The export volumes are a show of investor confidence in the local industry and its quality of service, products and technology, he said. Exports were also boosted by the country’s Automotive Production and Development Programme, which has built a good base for assembly and allowed for high volume production, and supportive trade policies, Moothilal said.

Top buyers

With the UK and U.S among the top buyers of South African-produced cars, there are concerns about the impact of Brexit and the 2025 expiration of the African Growth & Opportunity Act, which provides Sub-Saharan African countries duty-free access to the US.

Trade and Industry Minister Ebrahim Patel told an industry meeting in August that his department would do “everything in its power” to ensure that negotiations, which have a direct impact on industrial policy, yield positive outcomes, Mabasa said. The transport industry, which accounts for 14% of South Africa’s export value, is the largest component of the country’s manufacturing sector and provides more than 100,000 skilled jobs.

Local sales stall

Upbeat export prospects also offer some respite as domestic sales continue to decline. The number of new cars sold locally has fallen in four of the past five years as the economy failed to expand by more 2% annually.

That pattern is likely to continue this year despite below-inflation price increases and aggressive discounting by retailers. Data from credit bureau TransUnion show price increases have remained below consumer-price growth for two years - the longest period of below-inflation increases since record keeping began almost two decades ago. A deterioration in consumer spending power has seen finance houses fund 2.16 used vehicles for every new vehicle and there’s been a marked shift to purchases below R200,000, said Kriben Reddy, head of auto at TransUnion Africa.

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