The South African Automotive Industry: Causes for Optimism

The South African Automotive Industry: Causes for Optimism
July 9, 2018 gnuworld

Despite a downturn in vehicle sales and a highly competitive manufacturing sector in recent years, the South African automotive industry is expected to fare somewhat better in 2018 and 2019 than it has over the past two years. But are these predictions a cause for optimism?

The decline of the South African automotive industry

The last few years have not been kind to the South African automotive industry. According to the National Association of Automobile Manufacturers of South Africa (NAAMSA), 2016 was a particularly rough year. The industry recorded a year-on-year decline for the third year in a row, with sales falling by 11.4% compared to the previous year.

The decision by General Motors (GM) to cease manufacturing in South Africa by the end of 2017 didn’t help the situation. This saw the departure of big car brands such as Dodge and Chrysler. The decision came not long after Citroën also pulled out of the country.

Despite a decline in new car sales, vehicle and component production is still the biggest manufacturing sector in South Africa. It accounts for more than a third of South Africa’s manufacturing output.

How things are turning around

The decline in new vehicle sales has been largely attributed to a dip in our domestic economy and above-average inflation in the new vehicle market.

Despite this, 2017 saw a slight improvement over the previous year, with a 1.8% increase in new vehicle sales. That trend has continued so far in 2018, with a prediction from NAAMSA of a 3% increase overall.

The rental market, which accounts for 13% of new vehicle sales, also experienced above-average growth in 2017. This is helping to boost market recovery, although it will take time for the damage done by the three-year slump to be undone.

Further causes for optimism

Even with the challenges it has faced, our automotive industry has proved to be remarkably resilient.

Here are a few things you might not have known about the South African car industry:

  • it’s the largest new vehicle market in Africa, accounting for 37% of all new vehicle sales on the continent
  • our automotive exports increased over 80% from 2012 to 2016, resulting in a significant improvement in the motor industry’s trade deficit
  • the decline in new vehicle sales has meant that the after-sales market was given an economic boost
  • some car brands are becoming more invested; Audi plans to launch the new A6, new A7, new A8 and all new Q8 before the end of 2018, and to introduce the first fully electric Audi vehicle in South Africa in 2019
  • most experts agree that, despite the VAT increase, the South African automotive industry can expect modest growth to continue in 2018 and 2019.

Affordable spares and parts from Masterparts

Due to economic challenges, many South Africans are opting to keep their existing cars or to buy second-hand instead of splashing out on new cars. With proper maintenance and timely replacement of parts, you can extend the life of a vehicle significantly.

Masterparts offers a comprehensive range of automotive spares, parts and components. We stock thousands of parts, for almost all vehicle makes and models on South African roads.

Whatever part your vehicle needs, contact us online or call us on 021 657 5757 and we’ll be able to help. We have branches across South Africa, as well as a branch in Namibia.

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