SOUTH AFRICA’S CAR INDUSTRY REVVING UP IN HEALTHY ECONOMY
South Africa’s car industry is expected to notch up record sales and exports this year, revved up by an increased purchasing power and a healthy economy, manufacturers and analysts say.
More than 45 000 new cars were sold last month, up 19,4% from the same month in 2004, when new car sales hit an all-time high, from top-end imported ”supercars” to the cheapest models on the market.
”If there is one major success story within South African manufacturing, it’s the automobile industry,” said BMW’s local head of communications, Richard Carter.
”It’s an iconic success story and a clear indication of what the country can do when a plan comes together to compete with the rest of the world,” he said.
Analysts link South Africa’s motor boom to increased spending power and business confidence, boosted by the government’s inflation targeting of between three and six percent and the lowest interest rates in decades.
”The economy is booming in all sectors such as banks, financial services and retail. There is a lot more money circulating and, with the emerging black population there are more people who can now afford a car,” said Duane Newman, an automotive analyst at financial advisers Deloitte.
”I think people have more to spend but they also have more access to credit than ever before,” added Nedbank’s Vehicle and Asset Finance general manager, Steve de Blanche.
South Africa is heading for another record year, despite a recent cooling in sales.
”The exceptionally strong growth trend in South African new vehicle sales should continue throughout 2005 with the market recording for the second successive year, record sales,” National Association of Automobile Manufacturers of South Africa (Naamsa) director Nico Vermeulen said.
Growing from humble beginnings, South Africa’s motor industry is now slightly larger than the country’s traditional economic keystone, mining, contributing 7,2% to the gross domestic product, compared to mining’s 7,1%.
More than 33 000 South Africans work at car plants countrywide for international makers such as BMW, DaimlerChrysler, Delta, Ford, Toyota and Volkswagen.
Even in the top ”supercar” class of imported Italian, German and British thouroughbreds, sales have increased in the past year as South Africans vie for what is seen as the ultimate status symbol.
At Ferrari in Johannesburg, director Ivo Sega says business is good.
”There are plenty of the ‘new generation’ who came in and bought one last year,” said Sega of the sportscar with a new price tag starting at R2,4-million.
”There are definitely more rich people around these days.”
Success on the home front has prompted the motoring industry to cast its eyes abroad, exporting to countries including the traditional automotive giants like the United States and Japan.
BMW said it will ship out about 80% of its new 3-series model once in full production, while last month Toyota started exporting the first of its new Hilux pick-ups to 70 countries, with a revenue potential of around R120-billion.
In mid-2004, Volkswagen announced the planned export of about 15 000 new generation Golf models, while Ford said in May it had started exporting the Focus model as well as several pick-ups.
DaimlerChrysler is exporting about 75% of its right-hand drive C-class model to countries such as Britain, Australia and Japan.
Despite the boom, South Africa’s car industry however is small compared to giants such as the United States, Japan, Germany, China, France, South Korea and Brazil.
Last year, 455 052 cars were manufactured in South Africa compared to 11,9 -million in the United States and 10-million in Japan, according to the International Organisation of Motor Vehicle Manufacturers (OICA).
This places South Africa roughly in the same category as Sweden, Poland and the Czech Republic. – Sapa-AFP