DAVID FURLONGER: Look on the bright side of life

We have a tendency in SA to navel-gaze — to concentrate on what’s happening locally, and not look further afield for context. As a result, we sometimes think problems are unique to us, when in fact we’re caught up inescapably in the same challenges facing the rest of the world.

Take the SA motor industry. It may not be exactly bouncing with health at the moment, but it’s doing a hell of a lot better than its peers in many parts of the world.

Figures released this week by the vehicle manufacturers’ body, Naamsa, show a sudden growth slowdown in local new-vehicle sales and a sharp drop in exports. Local sales of new vehicles in May increased 2.1% from a year earlier, from 38,358 to 39,177. Cars were once again the saving grace, increasing by 13.8%, from 24,119 to 27,437.

Sales in the low-volume truck market also grew, but light commercial vehicles, mainly bakkies and minibus taxis, plunged 22.6%, from 11,912 to 9,221.

The main reason isn’t hard to find. The closure of Toyota SA’s vehicle assembly plant in Prospecton, Durban, since April, after it succumbed to KwaZulu-Natal’s biblical floods, has deprived the market not just of its top-selling vehicle, the Hilux bakkie, but also the HiAce, which accounts for 98% of SA minibus taxi sales.

Along with the Corolla Cross and Quest cars, and Hino trucks, which are also made at Prospecton, some pre-flood units are available, but they will soon be gone. The company is still not sure when production will resume.

Of course, Toyota’s problems are not the only reason for the overall market slowdown. Early this year, sales were nearly 20% ahead of 2021. Now the advantage is 12.2%.

This is hardly surprising, says Cyril Zhungu, Standard Bank’s head of automotive retail finance, when the industry and consumers are confronted with rising interest rates, inflation, a depreciating rand and record fuel prices. Throw in local floods and international events like war and Covid lockdowns, which are slowing the manufacture and delivery of vehicles, and it’s no surprise that sales are under pressure.

WesBank marketing head Lebogang Gaoaketse says the market is “fighting bravely for recovery”.

Alex Boavida, vice-chair of the National Automobile Dealers’ Association, hopes pent-up demand from customers who put off buying during the pandemic will sustain the market. She says that, historically, most vehicles bought new are traded in between three and four years old. Now the age range is five to six. “Pent-up demand is finally being satisfied after delayed renewals,” she says.

New-vehicle exports are not as robust. In May, they were 29.9% down on a year earlier — 25,788 against 36,798. For the first five months of 2022, the deficit is 8.2%, down from 152,813 to 143,346.

Once again, the loss of Toyota production, primarily Hilux, is a factor. In March, before floods struck, Toyota exported 6,837 vehicles. This fell to 3,629 in April then 143 in May.

However, the main reason for the export slowdown, says Naamsa CEO Mikel Mabasa, is a drop in demand from export markets affected by “rising interest rates, supply chain disruptions, resurgent Covid waves [and] producer and consumer inflation at the highest levels in decades”.

In other words, they face the same problems as SA. In many cases, these appear to be hurting them more than us.

Take China. In April, new-vehicle sales plunged 48% from a year earlier because of Covid lockdowns in cities like Shanghai. The 2022 market had been growing but after April’s collapse, aggregate sales for the first four months were 12% down on 2021. True, that still equated to 6.51-million vehicles (the equivalent of 10 full years in SA), but it knocked a hole in Chinese forecasts. With more lockdowns possible, recovery may take time.

The global shortage of semiconductor microchips is also taking its toll on China, as on the rest of the world, forcing motor companies to curtail production. In the US, that is cited as one of the reasons for an 18% fall in new-vehicle sales in April, to 1.26-million. Cars took the biggest knock, losing 23.3%, but even Americans’ beloved pickups and big SUVs suffered. Combined, pickups and SUVs account for 78% of the US light-vehicle market in 2022. Cars take up the other 22%.

In France, April was national doom-and-gloom month, with 474,083 new-car sales. If you exclude April 2020, when the world stopped for the first full month of Covid lockdowns, this was the lowest April total since 1965.

Why am I referencing April for overseas markets but May for SA? Because the SA motor industry is spectacularly quick off the mark with its sales reports. It will be several days (in some cases, weeks) before most other countries release their numbers.

In Germany, new-car sales in the first four months were down 9%, from 886,402 to 806,218. In the UK, the drop was 5.4% — from 567,108 to 536,727. Market shares there, where the government plans to outlaw sales of new petrol and diesel vehicles from 2030 and part-electric hybrids from 2035, show how much catching-up SA has to do.

To the end of April, UK sales of diesel cars were down 51.4%, reducing their market share from 11% to 5.7%. Petrol cars lost 17.1%, taking their share from 49.4% to 43.3%. Sales of self-recharging hybrid cars, using dual electric and liquid-fuel motors, rose 43%, and grew their share from 7.7% to 11.6%. Plug-in hybrid sales were unchanged but their share in a slowing market grew from 6.4% to 6.7%. The big winners were wholly electric battery-electric vehicles (BEVs), where year-on-year sales grew 88.3% to 77,064, taking their share of the total car market from 7.7% to 14.4%.

In China, sales of new-energy vehicles (NEVs) — an all-encompassing term for all forms of electric — rose 112% in the first four months, to 1.56-million. Of those, 1.23-million were BEVs. Naamsa executive manager Norman Lamprecht says that in SA in the first quarter of this year, 1,041 NEVs were sold. ​