Stronger rand puts brakes on SA’s motor industry
The industry exported 338,093 vehicles, mainly cars and bakkies, in 2017
The South African motor industry’s trade deficit grew more than 30% in 2017, courtesy of a strengthening rand and the loss of two months’ production at one of the country’s top vehicle exporters.
The 2018 Automotive Export Manual, published on Friday, shows that the deficit rose to R43.5bn in 2017, from R32.9bn in 2016. Vehicle exports, expected to set a new annual volume record, eventually fell just short after Volkswagen (VW) SA halted production of its Polo car in the last two months of the year to prepare for the introduction of a new model in 2018.
The industry exported 338,093 vehicles, mainly cars and bakkies, in 2017. That was 2% down on the record of 344,821 set in 2016.
Norman Lamprecht, executive manager of the Automotive Industry Export Council, which publishes the manual, said he expected the number to reach 366,000 in 2018.
Despite a two-month manufacturing shutdown at another exporter, BMW SA, to switch production from the 3-Series car to the X3 sports utility vehicle, total industry exports for the first four months of 2018 were 1.4% ahead of the same stage in 2017.
Lamprecht said a stronger rand in the second half of 2017 undermined local currency earnings. Nowhere was this more evident than in trade with the EU, where earnings rose in euros from €5.3bn to €5.7bn, but fell fractionally in rand terms from R86bn to R85.9bn.
The EU is SA’s biggest trading partner, accounting in 2017 for 52.1% of total vehicle and component exports of R164.9bn, and R86.6bn, or 55.3% of imports of R154.6bn.
The value of this market in 2017 was R53.8bn, hence the overall trade deficit of R43.5bn.
In 2017, vehicle and component production accounted for 30.1% of South African manufacturing output. Local companies invested R12.2bn in manufacturing operations. Automotive exports made up 13.9% of the country’s earnings.
SA-made vehicles and components were exported to 149 countries in 2017. About 60% of vehicle production is destined for other markets. In January, the industry exported its 4-millionth vehicle.
The UK took 98,358 vehicles in 2017, making it SA’s top destination. But when it came to overall export values, Germany, represented in SA by Mercedes-Benz, BMW and VW (including Audi), was SA’s number one.
The combined value of vehicle and components exports to Germany, R46.8bn, dwarfed the second-placed US, on R18.8bn.