Vehicle exports from South Africa declined by 73 419 vehicles, or 40.3%, in the first half of the year, compared with 2019, says National Association of Automobile Manufacturers of South Africa (Naamsa) trade, exports and research executive manager Dr Norman Lamprecht.
This decline saw vehicle export revenue drop by R21.3-billion from R67.2-billion in the first six months of 2019 to R45.9-billion in the same period this year. This can be attributed directly to the Covid-19 pandemic, as most countries imposed lockdown restrictions, which resulted in a fall in new-vehicle demand.
The significance of exports for the country’s motor industry was highlighted in 2019, when, despite a progressively declining domestic new-vehicle market, reaching its lowest sales level since 2010, vehicle exports once again showed exceptional growth in 2019 to support the export-oriented industry’s overall performance.
South Africa’s automotive industry exported a record 387 125 left- and right-hand-drive vehicles to 105 countries in 2019 – up from 351 139 vehicles in 2018 – generating record export revenue of R148-billion.
“Record vehicle exports in 2019, accompanied by continued high levels of investment in the domestic automotive industry and large-scale employment of high-skilled jobs, were testimony to the largest manufacturing sector’s contribution to the South African economy,” notes Lamprecht.
The regions by numbers
South Africa’s new-vehicle exports to Central America saw a 75.2% decline in the first half of this year, compared with the same period last year. However, export numbers to this region are very small, at 106 vehicles in 2020.
The most significant decline was to Europe, at 41.3%, with 78 520 vehicles exported to this region, compared with 133 672 units in the first six months of 2019. “Considering that a significant 64.1% of South African vehicle production was exported in 2019, with Europe accounting for 73.8% of the 387 125 vehicles exported, developments in the region have a direct and measurable impact on the domestic automotive industry’s performance,” says Lamprecht.
“Some positive news for the domestic automotive industry is that the major European markets reflected an improved performance since June this year, in line with the easing of the lockdown restrictions,” says Lamprecht.
Japan and Africa
The decline in new-vehicle exports from South Africa to Asia mainly reflects a drop in exports to Japan, the domestic automotive industry’s third-largest vehicle export destination. The impact of Covid-19 on Japan’s automotive industry has been relatively mild, with the new-vehicle market declining by only 8.9% for the first half of 2020, compared with the same period last year, says Lamprecht.
“South African-built bakkies, in particular, continue to be the popular choice of mobility for new-vehicle buyers on the continent.
“Large infrastructure projects linking African countries and increasing intra-African trade could be the platforms to launch the continent into a new era of prosperity. Investment in infrastructure tends to increase business confidence, and simultaneously lowers transaction costs by making it easier for businesses to move people, goods and services.
“In this regard, the implementation of the African Continental Free Trade Area (AfCFTA) could mark the beginning of a promising decade for Africa. Unfortunately, due to Covid-19, the implementation of the AfCFTA, which aims to create the world’s largest free trade bloc, has been postponed from July 2020 to2021.”
Since the Covid-19 pandemic is significantly stifling export-orientated industries such as the automotive industry, South African vehicle exporters will have to consider various scenarios for the world economy and global trade patterns in the short to medium term, says Lamprecht.
“Most domestic vehicle manufacturers have grown their volumes substantially, and now produce a very high proportion of vehicles for the export market. Exports, therefore, have been and will remain key for the motor industry in South Africa to generate sufficient economies of scale and to achieve improved international competitiveness.”
By Dr Norman Lamprecht