South Africa's automotive exports decreased in the first two months of the year, but Naamsa projects an overall rise of 36 per cent, compared with last year’s level, to 170 800 units in 2005.

South Africa's automotive exports decreased in the first two months of the year, but Naamsa projects an overall rise of 36 per cent, compared with last year’s level, to 170 800 units in 2005.

CARtoday.com reported earlier this month that there was a seven per cent decrease in the number of cars exported from South Africa in the first two months of the year as sales declined on overseas markets.

Naamsa said exports of all vehicles in January and February were 761 units down on the first two months of last year, a 3,9 per cent fall, with cars showing a decline of over seven per cent.

At the time, the unexpected end to the steady build-up of vehicle exports seen in recent years alarmed the trade and industry department, “as it highlighted growing uncertainty as to whether South Africa can sustain the growth of this vital export sector”.

Exports, imports on the rise

But in its latest report to government on business conditions for the last quarter of the past year, Naamsa suggested exports growth would be sustained and would rise from last year's level of 125 306 units to 170 800 in 2005. However, imports were also on the rise.

Although the total vehicle market in South Africa was expected to grow by 12 per cent to 410 000 units in 2005, a large proportion of the extra sales would be of imported vehicles. The number of imported cars was expected to jump to 98 000 units in 2005.

By comparison, local car production for the domestic market is predicted to rise more slowly from 163 474 units last year to 175 000 in 2005.

Industry employment levels ‘stable’

Naamsa chief executive Nico Vermeulen noted that employment at South African manufacturing plants remained "stable" during the fourth quarter of last year.

Naamsa is engaged in a study to determine "employment levels and trends in the automotive industry since 1996 to date".

He said that the cost of local components "continued to be affected by local suppliers applying for recovery of cost increases fuel, energy, steel including recovery of foreign exchange related costs".

Prices were being affected by worldwide increases in polyurethanes and "rising prices of petrochemical-based materials were also evident. Local raw material prices continued to mirror international pricing trends," he said.

"In the case of Iscor steel products, the planned double digit percentage price increase remains an issue of concern and is the subject of ongoing discussions between the auto industry and the steel supplier," Vermeulen added.

’Invesment since 2000 almost doubled’

The Naamsa report also suggested that annual investment in the automotive industry will have almost doubled since 2000.

In 2000, investment was at R1,6 billion, rising to R2,1 billion in 2001, with a further leap to R2,7 billion last year, and a projected investment of R3,1 billion this year.

Vermeulen predicted that the South African market would enjoy "modest growth" this year. He said the strength of the rand, prospects of lower inflation and an easing in interest rates, tax relief, sound macroeconomic policies and the general resilience of the economy, should support demand for new vehicles.

Original article from Car