Motor industry in shocking state

Don Robertson

Don Robertson

More than 2500 jobs were lost in the local motor manufacturing sector in the first three months of this year, according to the National Association of Automobile Manufactures (Naamsa).

Naamsa's latest quarterly review, released on Friday, reveals the shocking state of the local motor industry in the first quarter of the year.

Any stabilisation or even a recovery in the market has been put back by three months or more to the end of the year.

"The current year-on-year quarterly falls in domestic new vehicle sales are without precedent in the history of the South African auto industry," said Naamsa.

During the quarter most assembly plants operated on a shortened production week.

Total new car sales were down by 30percent in the first three months to 60000, while combined commercials sales lost 40percent to 33000.

The job losses are a substantial figure in an industry of only 32000-plus jobs at production plants.

Capacity utilisation reflected a cut in production for both the local and export markets and lower interest rates and falling inflation are expected to impact only towards the end of the year.

But all is not bad for the industry. Projections for capital expenditure this year is, in fact, marginally higher at R3,6billion compared with R3,2billion last year, although well down on the R6,2billion in 2006 which reflected a production expansion capacity for the introduction of a new model.

Also positive was the motor industry's contribution to the country's gross domestic product which rose to 7,29percent last year from 6,79percent during the same period in the previous year.

This takes into account all aspects of the industry including manufacturing, retail, distribution and servicing, component production and exports and exports of fully built-up vehicles.

Capacity utilisation at the assembly plants was erratic. In the case of cars it moved from a peak of almost full production to as low as 24percent, light commercials down to as low as 41percent and heavy trucks and buses as low as 24percent.

Looking ahead the ever optimistic motor assemblers who report to Naamsa forecast that sales and exports would start stabilising, but not increasing in the next few years.

After domestic production reached 563000 last year and exports of 284000, local production volumes this year will peak at 419000 vehicles and 191000 exports.