Business Day (Johannesburg) THE prospect of global economic cession has raised fears of a slide in exports of locally manufactured cars.
Exports, which are still expected to peak this year, are shoring up SA’s vehicle sales, which have been in decline since last year due to high interest rates and the introduction of the National Credit Act.
Local new vehicle sales slid 18,1% year on year last month to 40955 units.
But during this period, new vehicle exports climbed 217,4% to 18867 units.
The National Association of Automobile Manufacturers of SA (Naamsa) said that vehicle exports were expected to increase from last year’s 171237 units to a new record high of 280000 this year.
Naamsa executive manager Norman Lamprecht said that there was concern about the state of the global economy even though the automotive sector was used to cyclical swings. Econometrix senior economist Tony Twine has warned that the impending recession could hit local vehicle exports.
“What we are witnessing is the destruction of wealth, or at least apparent wealth.
“Under these circumstances, it would not be surprising at all to see lower global vehicle demand, particularly in developed countries, which are bearing the brunt of the financial service sector meltdown,” Twine said.
Automotive exports, consisting of vehicles and components, are mostly to developed countries, which are the epicentre of the credit crisis. Last year, automotive exports to the European Union member countries made up 48,1% of SA’s total automotive exports of R67,6bn, according to Naamsa. The top vehicle export destinations last year included Japan (39748 units) and Australia (34034 units), with the US third at 18764 units.
The local automotive sector’s exports, as a percentage of total South African exports, have risen more than threefold, from 4,1 % in 1995 to 13,7% last year, according to Naamsa.
“For 2008, exports of built-up vehicles are projected to increase significantly,” it said.