2023 a tough year for motor industry

The South African motor industry has had its share of gloomy sentiment this year.

Most recently was an interview in which Volkswagen passenger cars CEO, Thomas Schäfer, portended that ongoing electricity supply disruptions and logistical impediments related to national railways and ports networks, could take their toll on local operations. Expectedly, the comments sparked a furore, with speculation that Volkswagen South Africa (VWSA) would shut shop. Soon after, the company clarified and reiterated its commitment to local production, underpinned by the Kariega, Eastern Cape plant, which has been operating since 1951.

Of course, his concerns and sentiments are relatable to most citizens: the challenge of load shedding, in particular, has encumbered businesses and strained livelihoods across all sectors. This is nothing new, but the prospects are no less sobering.

The president of Ford Africa, Neale Hill, publicly echoed a similar view to Schäfer earlier this month, cautioning that SA is seen as representing too great a risk for future automotive investment, mired by current challenges. Depressed new vehicle sales have reflected of increasing economic pressures. Commenting on the November figures released this week, Mikel Mabasa, CEO of Naamsa, the national automotive business council, noted that the market declined by 9.8% compared to the same month in 2022.

November marked the fourth consecutive decline in new vehicle sales figures. Last month saw 45,705 registrations compared to 49,986 in November last year.

“The new vehicle market was 1,3% below the pre-pandemic level of 2019 at the beginning of 2023, for the year-to-date it was now 0,6% ahead of the same period 2022, which means that, depending on the December sales figures, could miss out in returning to the pre-pandemic level after three years,” stated Mabasa.

The sector's productivity relies heavily on infrastructure investment, sustainable energy supply, and the revitalisation of SA's ports, rail, and road, he noted. Rising fuel prices placed further strain on motorists this year, with recent decreases providing needed respite.

Following a reduction that took effect on November 6, the price of unleaded 95 inland has returned to below R25 per litre, now R23.26; while the inland wholesale price of diesel is R21.99. Among others, more positive highlights on the local motoring calender was the 2023 South African Car of the Year. A rather historical one as it was the first time a double-cab took top honours. The Ford Ranger in Wildtrak 3.0 V6 4WD automatic guise clinched the trophy as overall winner.

There were interesting developments on the alternative energy front this year. At the fifth annual Smarter Mobility Africa summit, Toyota, in partnership with Sasol, showcased the hydrogen refuelling process with the Mirai fuel cell electric vehicle.

Toyota SA CEO, Andrew Kirby, discussed the possibility of hydrogen refuelling infrastructure, initially in Johannesburg and Tshwane, followed by major long-haul routes in the long-term. At the preview, Sasol trumpted its green hydrogen production operations at its Sasolburg plant, supported by a 3MW solar farm, to be supplemented by 69MW of renewable energy from a wind farm in the Eastern Cape next year. New energy vehicle solutions were high on the agenda at the South African Auto Week 2023, which was held during October Transport Month.

Addressing attendees, deputy president Paul Mashatile said conducive policy framework woud allow manufacturers to produce models kinder to the environment in addition to driving expansion and creating jobs.

This week, the government released its White Paper outlining an electric vehicle roadmap.

“It is grounded in the principle that decarbonisation should not lead to de-industrialisation but rather be leveraged for growth,” said minister of trade, industry and competition, Ebrahim Patel, at a media briefing on Monday.

Most crucial is that local industry starts producing electric vehicles for export markets – in order to secure the longevity of the sector.

According to minister in the presidency, Khumbudzo Ntshavheni, the policy will support investments in the development and expansion of new and existing manufacturing plants to manufacture electric vehicles in the country.

“SA’s automobile industry plays a critical role in economic growth and supports thousands of jobs, and the country is also endowed with mineral resources that position it to become a key and strategic player in electric vehicle value chains,” the minister said.

Patel claimed South Africans could start seeing locally-built electric vehicles in 2026. Despite a depressed market, new model launches continued at a steady pace this year. You can read our comprehensive recount of the good, bad and ugly, on the SowetanLIVE website.