The latest trade figures underline the urgency of future-proofing the SA motor industry’s trade security.
The 2024 Automotive Trade Manual, published last week by industry body Naamsa, shows promising improvements in export values and the overall trade surplus. But it also underlines that further growth is not guaranteed.
The total value of vehicle and component exports in 2023 was a record R270.8bn. This was R43.5bn, or 19.1%, more than in 2022 and represented 14.7% of all SA exports.
Vehicle exports were responsible for this growth, increasing by 47,809 units from 351,785 in 2022 to a record 399,594 in 2023. This translated into an export value of R203.9bn — up from R157bn.
Automotive component exports decreased last year from R70.3bn to R66.9bn. This was caused almost exclusively by a R4.5bn drop in shipments of catalytic converters, which reduce harmful exhaust emissions from petrol and diesel internal combustion engines (ICE).
This was the second successive year that converter export values fell. The trend is certain to continue as SA’s major export markets continue to abandon ICE technology in favour of electric vehicles (EVs).
Converter exports in 2023 were worth R29.5bn, which was 44.1% of the total of all components exports. The next biggest contributor was engine parts, at R5.1bn, followed by tyres at R3.8bn.
The SA components industry is trying desperately to diversify and be included in the global shift to EV technology. Clearly, it cannot happen quickly enough.
The weak domestic market caused imports of cars and bakkies to contract 8.6% in 2023 to 295,817. Even so, imports accounted for 76.9% of car sales and 18.8% of light commercial vehicles. Most of these vehicles, primarily from India but with China garnering an increasingly important share, were at the lower price end of the market.
Imported components continue to comprehensively outvalue local ones. Across the industry, local components make up less than 40% of the total value of SA-made cars and bakkies.
So while total vehicle production increased 13.9% last year to 633,332 to meet export demand, the value of imported components rose 34.1% to R160.4bn.
The overall result of these changes was that the industry’s annual trade surplus rose slightly in 2023 from R19.6bn to R21.1bn. Vehicle exports outweighed imports by R120.6bn, but components exports lost out by R99.5bn.
All these figures relate to vehicle manufacture. They do not include last year’s R83.5bn of imported aftermarket spare parts, many of them cut-price Chinese products.
Of SA’s total R270.8bn of exports, Germany was the main beneficiary, with R83.1bn, followed by Belgium (R34.1bn), US (R27.9bn), Spain (R17.8bn) and the UK (R14.7bn). The top 10 was rounded out by Australia, Namibia, Czech Republic, Zimbabwe and Japan. With the exception of SA’s two African neighbours, these countries all plan to phase out ICE technology in the next decade or so.
Last year, the local motor industry exported 66.5% of vehicles it manufactured. Nearly all, however, were ICE. After years of nagging by the local motor industry, the government has begun to outline how it plans to assist the transition to local EV manufacture.
Clearly, however, it cannot be a wholesale shift. Last year the industry exported to nearly 150 countries and territories. Many are nowhere near ready for an EV future, meaning the local industry must run parallel ICE and EV production for years to come.
The rest of Africa, particularly, will be a major ICE market. Last year, vehicle exports to the continent grew from 22,563 to 25,381 and the total value of automotive exports from R34.9bn to R42.8bn.
The latest trade manual shows the SA motor industry is doing its best to grow and meet changing market demands. The aim remains to almost double vehicle production in the next decade through growing local and export demand. Can it do so?
Nowhere is the challenge illustrated more starkly than in recent sales figures. In the first four months of 2024, exports fell 9.1%, the victim of political uncertainty, regional wars and the global economic outlook. Domestic sales were 4% down, as consumers buckled under the weight of economic pressures. No quick fix, home or away, is confidently expected.
Correction: May 13 2024
The headline has been amended to reflect that growth refers to exports.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.