SA auto industry achieves R21bn positive trade balance
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SA auto industry achieves R21bn positive trade balance

Driven by record vehicle exports, and outperforming the rest of the manufacturing sector.

Record vehicle exports helped take South Africa’s auto trade balance to a positive R21.1 billion in 2023 from R19.6 billion in 2022 – an increase of 7.6%.

Norman Lamprecht, chief trade and research officer at automotive business council Naamsa, said on Tuesday vehicle exports have remained the key driver for the automotive industry’s healthy trade balance since 2008.

“Despite a constrained economic environment undermining the domestic new vehicle market’s ability to fully recover to pre-pandemic levels in 2023, record-high vehicle exports ensured that the automotive industry outperformed the rest of the manufacturing sector,” he said.

“As the largest manufacturing sector in the country’s economy, a substantial 21.9% of value addition within the domestic manufacturing output was derived from vehicle and automotive component manufacturing in 2023, while the broader automotive industry’s contribution to the GDP comprised 5.3% – 3.2% manufacturing and 2.1% retail.”

More numbers

The industry has now achieved a positive trade balance since 2015, according to the annual Automotive Trade Manual, previously named the Automotive Export Manual, which was released this week.

However, the automotive trade balance figures exclude automotive aftermarket parts, which recorded a negative trade balance of R99.5 billion in 2023.

Lamprecht said this could mainly be attributed to a record vehicle export performance, resulting in vehicle export revenue increasing by 29.9% to R203.9 billion in 2023 from R157.0 billion in 2022.

He said automotive component exports decreased by 4.8% to R66.9 billion in 2023 from R70.3 billion in 2022, which is in line with lower catalytic converter exports.

The value of automotive imports increased by 20.2% to R249.7 billion in 2023 from R207.7 billion in 2022.

Lamprecht attributed this mainly to the 34.3% year-on-year increase in the imports of original equipment components in 2023, which was to accommodate new model launches by some original equipment manufacturers (OEMs) in the domestic market.

Automotive Masterplan

Lamprecht said the objectives of the South African Automotive Masterplan (SAAM) 2021-2035 are to increase vehicle production to 1.4 million vehicles per annum by 2035 and raise localisation levels in SA-manufactured vehicles from an average of 40% to 60% by 2035, which will contribute to decreasing reliance on imported components in the future.

Exports to the EU, the domestic automotive industry’s top export region, increased to a record R147.1 billion in 2023, while exports to Africa, its second-largest export region, rose to a record R42.8 billion.

Lamprecht said that given the high export exposure of the domestic automotive industry to the EU, legislation to ban the sale of new internal combustion engine (ICE) vehicles in the EU and UK by 2035 requires a speedy approach because of the required timeframe within which SA’s automotive industry must respond to this challenge.

EV white paper

Speaking at the launch of the latest Industrial Policy and Strategy Review on Tuesday, Minister of Trade, Industry and Competition Ebrahim Patel said the South African automotive industry experienced some noteworthy developments in 2023, and the pulse of this dynamic sector accelerated with his department’s release of the Electric Vehicle White Paper in November 2023.

Patel said the white paper outlines a comprehensive electric vehicle roadmap for South Africa and the structure of a suite of policy interventions tailored to the automotive industry.

“The primary goal of the white paper is to set a course to transition the automotive industry from primarily producing [ICE] vehicles to a dual platform that includes electric vehicles in the production and consumption mix, alongside ICE vehicles in South Africa by 2035,” he said.

Patel added that there was R50 billion in new investments by the industry between 2019 to 2023 for plant upgrades, new models, component manufacturing and new vehicle manufacturing factories.

He said Stellantis, the world’s fourth-largest car maker, has agreed to produce a Peugeot model in South Africa. This means it will build an entirely new factory in the Eastern Cape to produce this vehicle.

Stellantis announced in September 2023 that it planned to invest R3 billion in South Africa to establish a state-of-the-art greenfield automotive plant in Coega, Eastern Cape.

Patel added that Chinese automotive group Beijing Auto Industrial Corporation (BAIC) began semi-knocked down (SKD) production in Coega at the beginning of this year, and 11 companies are operating in the Tshwane Automotive Special Economic Zone (TASEZ) adjacent to Ford South Africa’s plant in Silverton in Pretoria.

The BAIC project, in which the Industrial Development Corporation (IDC) has a 35% shareholding and BAIC the majority 65% stake, has been significantly delayed.

The Coega Development Corporation in August 2016 signed what was termed a historic R11 billion investment deal with BAIC for the establishment of a completely knocked down (CKD) vehicle manufacturing plant in the Coega Industrial Development Zone.

Looking ahead

The Industrial Policy and Strategy Review said apart from improvements to existing and new policy approaches, the government will also have to respond to a number of major global economic shifts that are expected to accelerate in the coming years.

It said for the automotive industry, consolidating South Africa’s position as Africa’s largest car assembler and component producer presents a significant economic opportunity for the country.

The review said vehicle and automotive component production will be stepped up during the next five years as part of the SAAM commitments to substantially scale up output.

It said the following outcomes will be pursued:

  • At least 200 000 additional vehicles will be produced annually by the end of the five-year period, increasing production to at least 800 000 vehicles a year;
  • Enabling up to two new global manufacturers to commence assembly of vehicles (Stellantis and BAIC);
  • Expansion of production at existing assemblers, such as Ford;
  • New targets for local content in electric vehicles to be developed, and local content in petrol-fuelled cars to increase in line with masterplan targets; and
  • The shift to electric vehicles will commence, with small-scale production expected by 2026.