DAVID FURLONGER: Putin’ the brakes on trade

South African politicians may be cosying up to Russia and its alleged war criminal president, Vladimir Putin, but the local motor industry’s relationship with the country is anything but blossoming. Vehicle and export components to Russia have collapsed since it invaded Ukraine last year. 

Russia has never been one of South Africa’s biggest customers, but an export fall to R17.3m in 2022, from R48.3m a year earlier, is telling. It’s perhaps not surprising, given that most multinational motor companies have distanced themselves from Russia, suspending manufacturing and sales there, or selling their operations to Russian partners. 

Between 2021 and 2022, Russian vehicle production plummeted from 1.6-million to 608,460, relegating the country from 11th to 21st on the world ranking. That put it one place ahead of South Africa, which built 555,889 vehicles last year. 

Russia and South Africa, of course, are both members of Brics, the alliance of emerging economies that also includes China, Brazil and India. 

China and India are among South Africa’s biggest automotive trade partners but there’s no pretence of a partnership of equals. The latest trade manual of the Automotive Industry Export Council (AIEC) shows that in 2022, South Africa had two-way automotive trade of R34.8bn with China and R27.3bn with India. That ranked them third and sixth respectively among South Africa’s trade partners. 

Of the China total, only R351m left South Africa, while R34.5bn came in. The biggest contributors to the latter were R9.6bn of light vehicles (cars and bakkies), R5.1bn of assembly line components and R2.7bn of tyres. In the case of India, South Africa exported R553m and imported R26.7bn, including R21.6bn of light vehicles. 

Both Asian countries had major growth in light vehicle exports to South Africa — China from to 21,5176 to 34,939 and India from 129,364 to 165,910. They were the major contributors to an overall 23.5% increase in South African vehicle imports in 2022 — from 262,281 to 323,800. India alone contributed 51.2% of all imports, and China 10.8%. Imports accounted for 80% of all South African car sales in 2022, and 23.5% of bakkies. 

However, before anyone suffers a seizure at the unfairness of this import dominance, remember that South Africa exports more vehicles than it imports. Last year, the local industry sent 350,944 light vehicles to foreign customers. It’s also worth noting that import numbers were inflated by natural disaster. In response to the KwaZulu-Natal floods that forced it to suspend vehicle assembly at its Durban plant for four months, Toyota South Africa had to import thousands of extra vehicles. 

Some of these came from India, which has become an important manufacturing hub for many of the world’s leading brands, particularly for budget-friendly entry-level vehicles. Toyota, Suzuki, Volkswagen and Ford are among companies manufacturing there. 

Most of South Africa’s other major automotive partnerships were more even. In six of the top 10, South Africa had a trade surplus — most notably with its biggest partner, Germany, where R134.5bn of trade gave South Africa a surplus of R8.6bn. It was also R5.8bn up in dealings with its second-biggest partner, the US. More than 50% of South African exports there were vehicles, which land duty-free under the Washington government’s African Growth & Opportunity Act — a relationship which, some analysts say, is at risk because of South Africa’s continued flirting with Russia. 

South Africa exported automotive products to 152 countries and territories in 2022. Values ranged from the R71.5bn sent to Germany down to Fiji’s R1.1m. In destinations as diverse as Aruba, Mongolia, Antarctica, Yemen and Haiti, South African expertise is keeping people mobile. 

More than 40 African countries are also on the list. None figure among the top seven foreign destinations for combined vehicle and components values, but there are seven in the top 20, headed by Namibia, Zimbabwe and Botswana. When it comes to new vehicles, there are no African countries among the leaders. Market growth is slow. According to the AIEC manual, vehicle export volumes from South Africa to the rest of Africa grew 3.4% last year, compared with 11% for Europe, 45% for Asia, 172% for North America, 17% for Australasia and 116% for South America. Only Central America bought fewer South African vehicles in 2022. 

While many international new vehicle markets continued their post-Covid recovery last year, pan-African sales actually shrank.

Overall, the South African motor industry reported a R19.6bn trade surplus in 2022, down from R39.1bn a year earlier. Exports of vehicles and components hit a record R227.3bn and imports a record R207.7bn.