SA vehicle production expected to reach 7-year low in ’09

All sectors in the local automotive industry were continuing to experience “unprecedented viability challenges”, placing further pressure on the industry, which had already shed 2 566 jobs in 2008, the National Association of Automobile Manufacturers of South Africa (Naamsa) reported on Wednesday.

With the release of its quarterly business conditions review for the fourth quarter of 2008, Naamsa president Nico Vermeulen commented that domestic new vehicle sales and production would likely reach a seven-year low this year.

“2009 is expected to be an extremely difficult year for the entire South African automotive industry. The operating environment in all three sectors of the industry, during the first few months of 2009, has continued to deteriorate substantially,” he said in a statement.

Lower interest rates and declining inflationary pressure would likely improve the financial position of many local consumers by the second half of the year, when a recovery was expected to start.

However, an improvement in the international automotive industry would likely only start in 2010, with exports from South Africa expected to stay under pressure until 2011.

Exports of new cars and light commercial vehicles for 2009 would be down about 36% in volume and value terms this year, Naamsa reported, adding that exports of medium- and heavy-commercial vehicles and buses to the rest of Africa would likely increase.

Total exports for 2008 amounted to 284 211 vehicles, with preliminary trade data showing that combined component and vehicle export revenues reached R93-billion.

New vehicle sales in the fourth quarter of 2008 had been down by 30,2% to 62 835 units, compared with 89 976 units sold in the fourth quarter of 2007.

A total of 723 jobs had been lost in the quarter, as two major employers in the sector reduced its head count. One employer had, however, increased its headcount in the quarter.

The aggregate new domestic vehicle sales would be down by 16% to under 450 000 units in 2009, compared with the 533 387 new vehicles sold in 2008.

Similarly, domestic production would fall by 16,5% year-on-year, said Naamsa, reporting that the net effect on production would lead to a loss of 26% to 415 500 units, down from the 562 965 units produced in the previous year.

Meanwhile, the industry was expected to spend about R3,7-billion in capital expenditure during the year, compared with R3,3-billion spent in 2008.

Sourced via engineeringnews.co.za