Automotive exports surge 19% to new highs

Record high vehicle exports ensured SA’s automotive industry outperformed the rest of the manufacturing sector in 2023.

The export value of vehicles and automotive components increased by R43.5bn, or 19.1%, to a record R270.8bn last year, representing 14.7% of total SA exports.

The findings are contained in the Naamsa Automotive Trade Manual 2024 released Tuesday as the official source of data to the local automotive industry. It provides a comprehensive overview of the export and import performance of the SA automotive industry under the Automotive Production and Development Programme (APDP) and APDP Phase 2 (APDP2).

The industry’s impressive performance includes record exports to all major regions, including the EU, the Southern African Development Community (Sadc), the rest of Africa and North America. Exports to 87 of the country destinations were at an a record high, said Naamsa chief trade and research officer Norman Lamprecht, who wrote the report.

The local auto industry exported to 148 countries in 2023, down from 152 the year before, but the export value more than doubled in 29 of these countries, he said at Tuesday’s media briefing. Automotive component exports declined from R70.3bn in 2022 to R66.9bn in 2023, mainly due to the decline in catalytic converter exports to the EU.

According to Naamsa, though the supply of semiconductors remained constrained, the worst of the fallout seemed to have settled from mid-2023 onwards. Vehicle production in 2023 improved as original equipment manufacturers and their suppliers ramped up their production schedules with improved inventory to compensate for the shortages in 2021 and 2022.

The export-orientated local motor industry benefits from advantageous access to world markets through SA’s free trade agreements with major markets such as Europe and the UK, a preferential trade arrangement with the US, and being part of the Sadc free trade area.

In January, SA started trading under the African Continental Free Trade Area agreement, allowing it to export certain goods duty free or with reduced duties to a number of other African countries, providing the local motor industry with new export opportunities outside Sadc. 

SA vehicle production increased 13.9%, from 555,885 units in 2022 to 633,332 in 2023, with two-thirds of light vehicle production from SA’s seven motor manufacturers going overseas. The top export region was the EU, which increased in value to a record R147.1bn in 2023, while the second was Africa with R42.8bn. Germany remained the top export country with R83.1bn.

Volkswagen SA, with its Polo model, maintained its position as the country’s most exported car for the fifth year running.

Lamprecht reiterated Naamsa’s view that the biggest challenge facing the local motor industry was the impending ban on sales of new internal combustion engine vehicles in the EU and the UK by 2035 in favour of electric vehicles (EVs).

It requires a fast approach in SA given the high export exposure of the domestic automotive industry and the required time frame to respond, he said.

The release of the trade, industry & competition department’s white paper on EVs in November outlined a road map for SA and the structure of a suite of policy interventions tailored to the automotive industry.

In his February 2024 budget speech, finance minister Enoch Godongwana announced an incentive for local motor companies to build battery-electric vehicles, saying that from 2026 local producers of such vehicles would be able to claim back 150% of qualifying investment spending to produce electric and hydrogen-powered vehicles.

It was a good start but the finer policy details would determine whether it was enough to encourage investment, said Naamsa CEO Mikel Mabasa at the time.

Lamprecht said on Tuesday: “The transition to EVs is likely to drive demand for critical minerals, both within SA and the rest of Africa, providing an opportunity for increased regional industrialisation and the development of regional value chains.

“With the abundance of mineral resources on the continent, SA will become a key driver of EV adoption, be the hub of localising EV manufacturing, and [will] supply vehicle parts across the EV value chain.”

Other facts revealed by the Naamsa Automotive Trade Manual 2024 were:

• SA’s global vehicle production market share increased from 0.65% in 2022 to 0.67% in 2023, ranking it 22nd. Under the Automotive Industry Master Plan, the objective is to produce 1% of global vehicle production, or 1.4-million vehicles, a year by 2035.

• SA remained the dominant market in Africa, accounting for 54.1% of the continent’s total vehicle production of 1,171,422 vehicles in 2023.

• The automotive industry contributed 5.3% of SA’s GDP in 2023 — with 3.2% manufacturing and 2.1% retail.

• There were 46 passenger car brands and 2,172 model derivatives in the domestic market, which recorded 532,098 new-vehicle sales last year.

• The inflation rate for new light vehicles rose from 4.6% to 6.2% year on year, against a 6% rise in the consumer price index in 2023. Total new-vehicle revenue amounted to R289.3bn in 2023.

• Imports of light vehicles declined 8.6% to 295,817 units in line with a weak domestic new-vehicle market, which increased 0.5%.

• The top country of origin for passenger cars and light commercial vehicles imported into SA last year was India with 157,326 vehicles (53.2%), followed by China (13.3%) as financially strapped consumers gravitated towards more affordable cars.

• Last year 63.6% of the SA new-car market was smaller and more affordable vehicles below the R500,000 price range.

• Automotive original equipment manufacturers and their suppliers account for more than 116,000 high-skilled manufacturing jobs in SA, with about 500,000 formal jobs in the automotive supply chain.

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