New-vehicle sales declined by 1.8% year-on-year in the third quarter of this year, but increased by 6.3% quarter-on-quarter.

Notably, new energy vehicle (NEV) sales by 17 industry brands increased by 112% in the quarter from 953 units sold in the third quarter of last year to 2 019 units sold in the third quarter of this year.

Following a significant year-on-year increase of 421.7% from 896 units in 2021 to 4 674 units in 2022, comprising 0.88% of total sales, NEV sales for the first nine months of this year increased by a further 67% to 5 1 65 units compared with the 3 092 units sold in the first nine months of 2022.

Battery electric vehicle sales of 720 units for the first nine months of this year already exceeded the 502 units sold for the full 2022.

Vehicle exports increased by 19.1% in the third quarter to 116 362 units, compared with the 97 689 units exported in the same quarter of last year.

Passenger car sales, in particular, recorded a decline of 7.9% to 86 829 units, compared with the same quarter of 2022, while commercial vehicle sales having recorded an increase of 11.2% to 48 611 units in the third quarter, compared with the third quarter of last year.

The negative performance of the new-vehicle market during the third quarter of the year, compared with the corresponding quarter of last year, is mirroring the stagnating macroeconomic climate in the country, says naamsa | The Automotive Business Council.

The positive quarter-on-quarter performance could be attributed to higher seasonal sales to the car rental industry, while in the heavy commercial vehicle sector the higher sales reflect the increasing reliance on road transport owing to rail inefficiencies.

As of September 30, the automotive industry employed 33 620 people, which is an increase of 123 jobs quarter-on-quarter.

Employment in the vehicle manufacturing industry is generally linked to production and the substantial increase in employment in 2022 was in line with the steady recovery in vehicle production to pre-pandemic levels, as well as supported by the launch of new-generation models by some original-equipment manufacturers for the period under review, naamsa reports.

Major light vehicle manufacturers spent R7.1-billion in capital expenditure in 2022, particularly to manufacture new-generation models.

The industry body further reports that average industry capacity utilisation levels in the third quarter continued to reflect the recovery in vehicle production to pre-Covid-19 levels, but the ongoing global semi-conductor shortage impacted manufacturers differently, while loadshedding and logistics challenges also impacted the operations of companies in various segments to different degrees.

The average motor vehicle manufacturing industry capacity utilisation level for the cars segment was 96.3% in the third quarter, 79.5% for light commercial vehicles, 57.5% for medium commercial vehicles and 72.7% for heavy commercial vehicles.

GLOBAL VS LOCAL PRODUCTION

naamsa states that, although global vehicle production increased by 6% to 85-million vehicles in 2022, up from the 80.2-million units produced in 2021, it was still 7.7% below the pre-pandemic level of 92.1-million vehicles in 2019.

South African vehicle production increased by 11.4% from 499 087 units produced in 2021 to 555 889 units produced in 2022, exceeding the global year-on-year increase in vehicle production.

South Africa’s global vehicle production market share therefore increased to 0.65% in 2022. The country still accounted for 54.4% of Africa’s total vehicle production in 2022, while Morocco accounted for most of the balance.

INDUSTRY VIEW

The naamsa CEOs Confidence Index, which is an in-house business confidence indicator of current and future developments in the local automotive industry, currently reflects the shared sentiment of CEOs that companies are experiencing persistent economic strain despite easing of inflation.

The new-vehicle market, in particular, continues to grapple with affordability as subdued demand for high-priced luxury items such as vehicles correlates with a stagnating economy, which is further depressed by the high cost of living.

Although the impact of loadshedding has abated somewhat during the third quarter, some unplanned outages along with ongoing logistics inefficiencies at ports and on rail continue to disrupt business operations.

The CEOs that responded to naamsa’s survey have an overall negative outlook for all of the industry’s key performance indicators over the next six months going into 2024, as well as a negative outlook for general business conditions over the same period.

Besides the macroeconomic conditions, naamsa says the lack of an NEV policy framework from government to support the transition to NEVs continues to hold back investment in new business opportunities.