NAAMSA: December 2012 Car and Vehicles Sales in South Africa







Published by Gerald Ferreira Date: January 9, 2013
Categories: General News

RESUMPTION OF FULL INDUSTRY SALES REPORTING IMMINENT  

This time last year, NAAMSA advised that Mercedes-Benz SA (Pty) Ltd would, as a result of a global directive by its parent company Daimler AG, discontinue participation in the Industry’s domestic new vehicle sales and export sales reporting for the time being.

NAAMSA

NAAMSA is able to report that following extensive discussions between the Department of Trade and Industry, Mercedes-Benz SA (Pty) Ltd and the Association – agreement has been reached on an arrangement which will enable Mercedes-Benz to resume full reporting of the company’s new vehicle and export sales.  In summary, with effect from 1st January, 2013 SA Automotive Industry new vehicle sales and export data will be compiled, verified and distributed by Messrs RGT SMART after the release, for public consumption, of the data on the website of the Department of Trade and Industry.

The RGT SMART database will also be updated with the actual historical Mercedes-Benz monthly sales data.  It is anticipated that this task will be completed before the end of January, 2013 and this is likely to result in the final verified 2012 Industry sales numbers being adjusted, specifically in respect of the various segments.

For 2012 Mercedes-Benz South Africa (MBSA) provided a single total sales number for passenger cars, commercial vehicles and export sales.  Based on historical sales trends and forecasting techniques, Messrs RGT SMART compiled estimates for MBSA commercial vehicles sales by segment.  These estimates will be replaced with actual verified sales numbers.

Mercedes-Benz SA (Pty) Ltd, NAAMSA and the authorities welcome the resumption of full reporting by the company and acknowledge that the domestic sales, export and production data is strategically important to enable effective monitoring of the performance of the South African automotive Industry in terms of the Motor Industry Development Programme and the Automotive Production and Development Programme (effective 2013 through 2020) as well as for purposes of policy formulation and review.

BRIEF COMMENT ON DECEMBER, 2012 SALES

New vehicle sales ended the year 2012 on a positive note with aggregate industry new vehicle sales at 46 016 units recording an improvement of 825 vehicles or a gain of 1.8% compared to the total new vehicle sales of 45 191 units during the corresponding month of December, 2011.  The December 2012 new passenger car market which recorded a year on year volume improvement of 7.6% - had again been supported by relatively strong demand on the part of the car rental companies with the car rental industry accounting for 14.3% of total sales.

Export sales had also recorded substantial gains during December, 2012 and at 19 719 units reflected an improvement of 5 554 units or 39.2% compared to the 14 165 vehicles exported during December, 2011.

COMMENT ON YEAR 2012 NEW VEHICLE SALES AND AUTOMOTIVE INDUSTRY EXPORTS

Following record domestic new vehicle sales in 2006 when the domestic total market peaked at 714 315 vehicles – the market declined for three consecutive years through 2009 and thereafter registered three successive years  of relatively strong growth culminating in 2012 total sales of 623 914 vehicles.

For 2012 new vehicle sales were broadly in line with NAAMSA expectations which had projected an improvement in new vehicle sales for the year of up to 8%. In the event, industry aggregate sales for calendar 2012 at 623 914 units had improved by 52 499 vehicles or about 9.2% compared to the total of 571 415 new vehicles sold in South Africa during the previous year. Furthermore, factoring in the total sales reported by Great Wall Motors of 7 794 units for calendar 2012 – not split according to segment – the total South African new vehicle market last year would have been around 631 700 vehicles.

Aggregate annual industry sales by sector, over the past five years, were as follows –

Sector

2008

2009

2010

2011

2012

2012 /   2011

%   Change

Cars

329   262

258   129

337   130

395   429

439   997

+ 11.3%

Light Commercials

169   466

118   159

133   756

149   287

156   170

+  4.6%

Medium Commercials

  12 130

    7 229

   7 557

    9 259

    9 816

+  6.0%

Heavy, Extra Heavy, Commercial Buses

  22 529

 11 705

14 464

  17 440

 17 931

+  2.8%

Total Vehicles

533   387

395   222

492   907

571   415

623   914

+  9.2%

On balance, 2012 turned out to be a year of relatively solid growth.  New vehicle sales generally and new car sales in particular performed well above initial expectations despite a slowing economy.  Industry trading conditions remained intensely competitive with over 60 brands and close on 2100 model derivatives, in the new car and light commercial vehicle sectors, competing for consumers’ franchise.  Initial calculations indicate that motor industry new vehicle related sales turnover had grown by about 11%, based on volume increases and a weighted average estimated increase of about 3% in new vehicle prices, during 2012 to reach about R182 billion for the year.  Industry new vehicle export sales were estimated to have added a further R52 billion to total Industry 2012 revenue.

Export sales performed relatively well during 2012 and at 277 844 vehicles recorded the second highest annual export figure on record.

 

2008

2009

2010

2011

2012

2012 / 2011

% Change

2013

Projected

Cars

195 670

128 602

181 654

183 535

153 195

-   16.5%

180 000

Light Commercials

87 314

45 514

56 950

84 125

123 584

+ 46.9%

180 000

Trucks &   Buses

 1 227

      831

      861

      801

    1 065

     + 33.0%

     1 300

Total Exports

284 211

174 947

239 465

268 461

277 844

     +   3.5%

361 300

South Africa’s track record as a reliable manufacturer and supplier of high quality vehicles and automotive components to world markets has been firmly established with vehicle exports currently destined for 148 international markets.  Higher exports into African markets, China and Australia - particularly light commercials - more than offset lower new car exports into Europe.

Assuming continued demand in most export markets, projected higher exports to African countries and factoring in the growing contribution of light commercial vehicle export programmes – Industry export sales during 2013 could improve by some 83 000 vehicles or about 30% over 2012.  Total Industry exports are projected to reach about 361 000 units during 2013.

INDUSTRY PROSPECTS FOR 2013:  FURTHER MODEST IMPROVEMENT IN DOMESTIC SALES ANTICIPATED, AGGREGATE DOMESTIC PRODUCTION TO RISE AS A RESULT OF FURTHER GROWTH IN EXPORT SALES 

On the assumption that the South African economy will grow, in real terms, by around 3% in 2013 and taking account of expected other domestic and international trends  - the outlook for 2013 in terms of Industry vehicle sales by sector is summarised in the table hereunder –

Sector

2008

2009

2010

2011

2012

2013   Projected

Cars

329   262

258   129

337   130

395   429

439   997

475   000

Light Commercials

169   466

118   159

133   756

149   287

156   170

165   000

Medium Commercials

   12 130

     7 229

     7 557

     9 259

     9 816

  10 400

Heavy, Extra Heavy, Commercial Buses

 22 529

  11 705

  14 464

   17 440

   17 931

  19 000

Total Vehicles

533   387

395   222

492   907

571   415

623   914

669   400

The 2013 projections translate into an expected improvement of about 7.3% in domestic sales volumes for the year.

New vehicle sales over the medium term will remain a function of the performance of the domestic economy and, in the case of export sales, the performance of the global economy.  Prospects for the Industry for 2013, at this stage, remain positive, however, volume growth is expected to be more subdued than the annual growth in total sales recorded over the past three years, namely, 24.7% year on year in 2010, 16.1% in 2011 and 9.2% in 2012.

Economic factors and developments which will affect the performance of the Automotive Industry during 2013 include, on the positive side –

  • Following the strong improvement in trading conditions in the automotive retail market in 2010 and 2011, the recovery continued throughout 2012 albeit on a more subdued basis.  The positive momentum should continue into 2013 with demand supported by historic low interest rates, improved vehicle affordability, new high technology model introductions, easier access for consumers to vehicle finance and continued strong replacement demand following record Industry sales in 2006 and 2007.
  • Expectations that growth in the South African economy during 2013 will be around 3.0% supported by steps by the authorities to promote economic stability, investment, growth and employment.  Relevant in this regard was government’s commitment to the implementation of the National Development Programme which should boost confidence, investment and ultimately economic growth.
  • Demand by the car rental industry remained strong during 2012 and should continue to make a positive contribution on the back of further growth in tourism and business travel in 2013.
  • A sound and stable monetary and fiscal policy environment as well as a stable automotive Industry policy framework which continues to provide manufacturers with the certainty and predictability required to make investment decisions.
  • The lower interest rate environment and the substantial ramp up in public sector infrastructure spending as well as continued dependence on road transportation of goods and materials should support commercial vehicle segments.

On the negative side, the following factors remain relevant –

  • Rising inflationary pressures in 2013 and the associated risk of upward pressure on interest rates towards the end of the year.  Furthermore, manufacturers and importers are under pressure from the weaker rand and the relatively modest vehicle price increases over the past three years may not be sustainable.
  • South Africa’s economic performance is closely linked to the fortunes of Europe, the United States and Asia.  The global economy continues to be affected by the financial and economic difficulties in the Euro area.  However, the world economy is in the process of a gradual recovery on the back of improved economic prospects in the United States and emerging economies.
  • Domestic and international geo political events always represent imponderables which could unsettle markets and sentiment.

The 2013 employer – union automotive Industry negotiations should commence during the second quarter and will hopefully result in a new agreement without industrial disruption being experienced.

Factoring in the expected improvement in domestic sales growth in exports, domestic production of motor vehicles in South Africa during 2013 was expected to rise from the approximately 550 000 vehicles produced in 2012 to about 650 000 units in 2013 – an increase in vehicle production of about 18%.

The projected higher levels of vehicle production are consistent with the official vision for the Industry which is to remain a premier supplier of high quality, competitive automotive original equipment parts and accessories and vehicles to international markets and, in the process, to achieve an annual domestic vehicle production figure of close to 1.2 million vehicles by 2020.

THE AUTOMOTIVE PRODUCTION AND DEVELOPMENT PROGRAMME (APDP):  2013 – 2020

2013 Marks the introduction of the APDP which succeeds the Motor Industry Development Programme (MIDP) – a developmental programme that has been in place since 1995 with specific focus on the production of vehicles and automotive components for export.

In contrast to the MIDP which incentivised exports of vehicles and components, the APDP will focus on added value in the production of vehicles for both the local and export markets.  The official objective of the APDP is to grow South Africa’s vehicle production from about 550 000 vehicles in 2012 to 1.2 million vehicles by 2020.  To realise this vision, a quantum improvement in the Industry’s competitiveness – covering domestic component and vehicle manufacturing as well as distribution and logistics – will be required.  In this regard, the focus of vehicle manufacturers will be on productivity improvement and cost reduction.

Vehicle manufacturers and their suppliers would have to work together to reduce the cost gap against world class bench marks and collaborate closely to achieve sustained net cost reductions to enable the industry to become more competitive internationally, to grow the Industry’s export business and provide affordable products to the local market.  In this context, the role and contribution by the trade unions will also prove of vital importance.

The key elements and provisions of the APDP include –

  • A 25% import duty through 2020 applicable to cars and light commercials and a 20% duty in respect of imported original equipment components;
  • An assembly allowance of 20% declining to 18% over three years conditional on a minimum plant production volume of 50 000 units per annum;
  • An investment incentive for vehicle and component manufacturers of up to 30% in plant, equipment and other production related operations including research and development and to support incremental employment;
  • A production incentive to support domestic value addition.

The APDP would enable vehicle manufacturers and their suppliers to plan strategically for the future and to finalize future investment decisions with confidence and certainty.  Most vehicle manufacturers had already announced major new investments in vehicle manufacturing projects.  The APDP would also enable vehicle producers to tender for the future production of new, high volume models in South Africa.