The South African motor industry’s 2020 export performance was one of extreme highs and lows. Vehicle exports measured in numbers and value, plunged. As a result, so did the industry’s contribution to SA’s manufacturing output and GDP. At the other end of the scale, exports of vehicle components hit a high. Local producers of catalytic converters, which reduce exhaust emissions, could barely keep pace with overseas demand.
Multi-national motor companies showed their faith in South Africa by investing a record R9.2bn in their local operations. And the best news of all, the industry’s 2020 trade surplus was a record R48.2bn. R175.7 bn of exports versus R127.5 bn of imports.
Exports may have fallen by R26 bn from 2019 but imports fell faster, by R47.1 bn. The previous record surplus, R27.1 bn, was set in 2019. The numbers are recorded in the 2021 edition of the Automotive Export Manual published by the government’s Automotive Industry Export Council.
Naturally the cause of the unprecedented extremes was the Covid-10 pandemic, which played havoc with local and global demand.
Export council executive manager, Dr. Norman Lamprecht compiler of the manual, said: “For the global automotive industry, the pandemic has been the biggest deterrent to growth over the past century. Characterised by supply bottlenecks and dwindling new vehicle sales – the impact of the multi-wave pandemic on global markets is yet to be fully comprehended.”
For South Africa, the 2020 impact is clear. Vehicle exports which swallow nearly two-thirds of local production, fell 30% compared with 2019 from 387 092 to 271 288. Values fell from R148 bn to R121.2 bn. The number of imported vehicles also fell by about 30% and their value from R64 bn to R39 bn. Components exports rose from R53.7 bn to a record R54.5 bn. This was due mainly to the foreign growth in demand for platinum-based converters – particularly from Europe – where many countries are implementing new automotive environmental standards.
Converter export values grew from R20.46 bn in 2019 to R26 bn in 2020 aided partly by higher platinum prices. Converters accounted for 47.7% of the value of total SA components exports. The next biggest contributors were engine parts worth R3.3 bn and tyres at R2.7 bn.
With South African vehicle production shrinking from 631 921 to 447 218, demand for imported components also fell, from R1106 bn to R88.4 bn. The EU remained South Africa’s biggest export market in 2020, taking R105 bn of vehicles and components or 59.8% of South Africa’s total exports.
This included 75% of all exported vehicles. The UK, was still in the EU, was the biggest market with 67 798 followed by Germany (25 736), Japan (23 645), France (13 956) and Australia (13 041). Africa was the industry’s second largest destination for automotive products, buying R29.6 bn of goods.
Predictably, Germany remained overwhelmingly South Africa’s biggest automotive trading partner in 2020. Of R101.4 bn total trade. South Africa exported R56.1 bn and imported R45.3 bn. Next was the U.S., with the R25.5 bn split between R14.5 bn exports and R11 bn imports.
Of the R22.6 bn of trade with Japan, SA exported R6.1 bn and imported R16.5 bn. Thailand which provides many of the components built into SA made bakkies, sold R19.1 bn of goods to SA and imported R1.9 bn.
The mismatch with China was even greater. Of the total R18.5 bn trade South Africa exported R421 bn and imported R18.1 bn.
India, which produces low-cost vehicles for many of the world’s motor companies, was the major exporter of vehicles to South Africa in 2020, with 87 953, followed by Japan (22 280), Germany (21 280), Germany (21 699) and South Korea (14 854).
The manual says the decline in local vehicle production and sales reduced the motor industry’s share of total South African manufacturing output from 27.6% to 18.7% and its contribution to GDP, including manufacturing and retail from 6.4% to 4.9%.
Lamprecht predicts an 18% increase in vehicle exports in 2021 but warned it could take three years for numbers to recover to pre-Covid levels.“ The world economy is projected to recover in 2021 while it is also expected that South Africa’s economic growth rate will rebound setting the stage for a robust recovery,” he says.