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5 things you should know about the SA car industry

2017-07-05 15:01

Image: iStock

Johannesburg - The South African motor industry is holding up surprisingly well in a tough economic environment that is being exacerbated by political turmoil, says economist Dr Azar Jammine, Director and chief economist at Econometrix.

Naamsa reported that 45 369 models were sold locally in June 2017, an increase of 418 units or 0.9% compared to 44 951 vehicles sold in June 2016. Export sales at 31 631 vehicles, registered a gain of 429 units, an improvement of 1.4% compared to the 31 202 vehicles exported in June 2016.

Here are five things you should know about the SA car industry:

1 SA auto industry - a bright spot in the economy 

Jammine says that the decline in new vehicle sales in recent years affected retail sellers negatively but it would provide a boost for the after-sales market as buyers would keep their vehicles for longer. This means additional maintenance and servicing.

SA car sales: 'Mixed results' for June 2017

The economist said although the country was technically in a recession, with negative growth for two consecutive quarters, there were some bright points in the local economy with the motor industry being one of them. Encouragement also comes from a rise in the demand for electricity, a lower-than-expected inflation rate, vehicle price increases slowing, the price of fuel falling, a big improvement in the motor industry trade balance and a brighter outlook for the global economy.

2 Biggest vehicle market in Africa

He noted that South Africa remained the biggest vehicle market in Africa, accounting for 37% of new vehicle sales on the continent. North African countries Egypt, Morocco, Algeria, Tunisia, and Libya followed it. Interestingly, the island of Reunion, in seventh place, recorded more new vehicle sales (27 697) than eighth-placed Nigeria (20 000), which had been seen as Africa's powerhouse, but is now battling with a big downturn in its economy as the oil price stays comparatively low.

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3 Unemployment - a major challenge for SA

Jammine said that unemployment remained a major challenge for economic growth in South Africa, while services continued growing faster than manufacturing, which provided proportionately more jobs.

He said: "Another inhibiting economic growth factor is the fact that education in South Africa has been found wanting, with very poor results in terms of learners matriculating with good marks for maths and science. Only one learner in 40 gets a matric with a maths mark of 60% or higher.

"Although the effect of the downgrade by the ratings agencies have not been unduly dramatic yet, they will obviously impact on future investment decisions as does the current political turmoil, which is affecting business confidence negatively."

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4 New vehicles sales - Growth expected 

The Econometrix Chief Economist said he expects new vehicle sales to move into "a growth phase" in 2018, while the vehicle manufacturing industry continued to grow its share within overall manufacturing and as a contributor to the gross domestic product (GDP).

READ: Best-selling sports cars in SA: Can anyone catch Ford's Mustang?

5 Exports set to grow

He added that the local motor industry remained a very important player in terms of exports from South Africa of built-up vehicles, automotive components and replacement parts which was good news for the overall health of the industry.

Automotive exports increased 80.3% from 2012 to 2016, while the rate of imports was slower with an increase of 48.7%. This had resulted in a significant drop in the motor industry's trade deficit over the past five years, going from R42.3-billion in 2012 to R32.9-billion in 2016.

Automechanicaka Johannesburg 

The biennial Automechanika Johannesburg trade fair for the automotive aftermarket will be held at the Expo Centre from September 27-30.

In 2017, it will be co-located with Futuroad, a truck, bus and trailer show and Scalex, a trade fair for transport systems, infrastructure, and logistics solutions.

2017 Automechanika Johannesburg at a glance:
 
Dates: September 27 - 30 2017
Venue: Johannesburg Expo Centre
Cnr Nasrec and Rand Show Roads, Nasrec, Johannesburg

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