Naamsa predicts ‘modest’ industry growth

The automotive industry can expect a modest improvement – at best – in domestic new vehicle sales and relatively strong growth in vehicle exports and domestic production for the year ahead, according to the National Association of Vehicle Manufacturers SA (Naamsa).

“At this stage an improvement of around 1.0% in aggregate sales volumes is projected. However, most automotive companies are planning their operations on the basis of a flat market in 2019,” according to a statement released this week.

Factoring in the expected improvement in exports, domestic production of motor vehicles in South Africa increased from 601 178 vehicles produced in 2017 to about 610 000 in 2018. An improvement in industry vehicle production of about 8.0% was projected for 2019 to reach about 657 500 units.

Commenting on the extension of the Automotive Production Development Programme (APDP) from 2021 through 2035 – the announcement was made at in November last year – Naamsa said that despite the fact that the 2035 objectives of the programme were quite ambitious, the announcement should enable vehicle manufacturers and component suppliers to plan strategically for the future and to finalise investment decisions with confidence and certainty.

“At the commencement of the extended programme from 2021 onwards, the levels of support and incentives for vehicle manufacturers will reduce significantly and the only means for vehicle producers to recoup benefits will be through progressive and substantial increases in localisation – whilst remaining internationally competitive in terms of exports. Vehicle producers and suppliers will have to continue to work together to achieve sustained net cost reductions to ensure that the industry becomes more competitive internationally, to grow vehicle and components export business, and to provide affordable products to the local market.”

Naamsa believes automotive companies remain determined to rise to the challenges of the post 2020 programme which will involve incremental localisation, industrialisation and transformation throughout the automotive value chain.

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