TRALAC - Trade Law Centre

South Africa: Automotive sector gears up for record

Sunday, 15 April 2012

Source: Fin24 (South Africa)

Although the global economic crisis has left its mark, the local vehicle and component industry is still geared up to test a record export level of R100bn.

Dr Norman Lamprecht, managing executive for the National Association of Automobile Manufacturers (Naamsa) and the Automobile Industry Export Council (AIEC), said he remains positive that the industry will be able to export more than 300 000 vehicles this year. Component exports could rise by 10%.

Last year the motor industry contributed 6.8% to the gross domestic product (GDP), compared with 6.2% the year before. This is one of the most important sectors that can promote job creation and economic growth.

During the past week Lamprecht gave Sake24 a special preview of content soon to be published in the annual Automotive Export Manual produced on behalf of the AIEC.

Last year the value of vehicle and component exports rose 18.3% year-on-year to R82.2bn.

According to Lamprecht, right- as well as left-hand-drive vehicles and parts were exported to 130 countries and the value of exports to 27 countries more than doubled between 2010 and 2011.

Countries in this category include Algeria, Canada, Hungary, Thailand, Denmark and Russia.

Export performance would have been even better had it not been for the natural disasters in Japan and Thailand and the recession in Europe, he said.

The local vehicle and component industry had a record year in 2008 when vehicles and components worth R94.2bn were exported. The global crisis however led to the value of exports dropping sharply in 2009 to R61bn.

According to Lamprecht, last year's motor industry trade deficit (the amount by which imports exceeded exports) rose to R38.6bn, compared with R30.6bn in 2010. This was mainly owing to rising importation of replacements parts to service the increasing number of registered vehicles in the country – 10.2 million at the end of last year.

The importation of cheaper components from countries like China, in particular, has recently escalated, he said.

Last year Germany was South Africa’s top export market in terms of value, with vehicle and component exports worth R14bn, followed by the US (R3.4bn), the UK (R2.7bn) and Spain (R1.9bn).

“The trade agreement with the European Union in terms of which vehicles and components can be exported duty free to 27 countries and the Agoa agreement with America supported exports."

Lamprecht said vehicle exports to 39 African countries rose sharply to 67 442 units, compared with 42 533 the previous year.

He reckons the proposed “Cape-to-Cairo” free trade agreement, which will involve 26 African countries, offers the motor industry several opportunities – including the removal of import duty, and both infrastructural and industrial development.

South Africa’s inclusion in the Bric group (Brazil, Russia, India and China) will probably also unlock future opportunities for the local industry.

“The ratio of import values to export values to these countries however remains extremely skewed, thanks to the doubling of exports to China, India and Russia over the past two years.

"In 2011 the imbalances were, in respect of China, 22 to 1, India 12 to 1 and Brazil 4 to 1,” he said.

Lamprecht noted South Africa currently ranks 23rd among vehicle-producing countries, with a market share of 0.66% of total global vehicle production. During the 2006 boom the figure was 0.85%.

The Automotive Production and Development Programme, which comes into effect next year, aims to double vehicle production to 1.2 million units a year by 2020.

“The industry must try to maintain a market share of around 1% to be considered for future investment in the country,” Lamprecht said.

Source: Sake24.com



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