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South Africa Autos Report Q2 2008Published by: Business Monitor International Published: Apr. 30, 2008 - 53 Pages Table of Contents
AbstractA slight upturn in January automotive sales offered some good news for South African car dealersfollowing a gloomy 2007 when sales fell 5.2% y-o-y to 612,707 units, according to BMI’s latest SouthAfrica Automotives Report.Sector performance in 2007 marked the first annual sales decrease since 2002, although overall sales werethe second highest on record. Rising interest rates have had a crippling effect on the South African carmarket. In addition to high interest rates and stringent credit conditions, sales also suffered from industryspecific issues, such as rising material costs and a strike by parts manufacturers in September 2007.Rising prices were also a significant factor in an increasingly price-sensitive market, while cost increasesprompted manufacturers and importers to raise prices, impacting on exports. Exports fell by 4.8% to171,260 units, although these were also affected by the temporary closure for refurbishment of theMercedes-Benz plant in East London, which produces for export. There were small signs of a modestturnaround in the South African autos market in January 2008, with sales up 13.1% over the previousmonth to reach 47,296 units. While sales were still down 9.4% y-o-y, month-on-month (m-o-m) saleswere far stronger than the 6.0% growth recorded in January 2007. Toyota led sales with a 25.2% share ofthe automotive market, putting it well ahead of its nearest rivals Volkswagen on 15.0% and Mercedes-Benz on 12.5%. Going forward, there are grounds for optimism over the medium term. The 2010 Football World Cup willhave a positive impact on the automotive market, with car rental fleets expanded to cater for demand andinfrastructural developments spurring demand for trucks. In 2009 and 2010, car sales should grow by10% annually while commercial vehicle sales growth should average 8.8%. There will be some marketcorrection in 2011, but by 2012 the automotive market should see sales approach 860,000 units, up 26.1%over 2007 levels. Despite all the problems facing the domestic automotive sector, in January 2008, Ford announcedinvestment of ZAR1.5bn (US$207mn) for its South African subsidiary, which will expand the company’sproduction and export operations. The investment will be shared between vehicle production at FMCSA’splant in Silverton, Pretoria, and engine assembly in Struandale, Port Elizabeth. With work due to begin onboth facilities in 2009, production of the new Puma diesel engine should begin in Struandale in 2010,while a new compact pick-up truck will leave the Silverton plant in 2011. The injection will raise theannual production capacity of the Silverton plant to 110,000 units, of which around 75% will be exportedto other African markets and to Europe. The project is also a welcome boost for FMCSA, which has lostout on the contract for production of the Ford Focus for export to its Australian counterpart from 2011 asa result of delays in amending the Motor Industry Development Programme (MIDP). Get Full Details About This Report >> |
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