
The manufacturing sector in South Africa contracted 1.4% during the first quarter of the year, in turn contributing -0.2 of a percentage point to the country’s GDP which only grew by a measly 0.1%.
Of the nationwide manufacturing industry, the segment for motor vehicles, parts and accessories, and other transport equipment was the largest negative contributor.
The sector’s lacking performance is attributed to weaker demand for new vehicles as well as transport parts and accessories, as per Stats SA.
Similarly, a 0.3% decrease in Household Final Consumption Expenditure, which contributed another -0.2 of a percentage point to the total GDP growth, was chalked up to, among others, a 1.3% decline in transport spending by South African consumers.
Net exports also saw a drawdown of 2.3%, largely influenced by decreased trade in vehicles and transport equipment excluding aircraft, said the Department of Statistics.
Vehicle sales and export pain
Stats SA’s findings are echoed in Naamsa the Automotive Business Council’s latest quarterly review of business conditions report.
The organisation noted that aggregate passenger-car sales during the first quarter of 2024 recorded a decline of 8.1% compared to the corresponding quarter of 2023 to a total of 84,777 units. Commercial-vehicle sales dropped by a less substantial 0.7% to 46,021 units.
Exports lost momentum, too, experiencing a year-on-year contraction of 3.7% to 81,664 vehicles.
Domestic vehicle production also suffered in the first three months of the year recording a decline of 2.2%, which is ascribed to a constrained domestic new-vehicle market along with lower vehicle exports, said Naamsa.
The following table reflects South Africa’s automotive industry export performance by major region from 2019 to Q1 2024:
Naamsa expects business conditions to remain depressed for the second quarter of 2024, but that things will start looking up in latter half of the year.
“The downward slope in new vehicle sales that commenced in the third quarter 2023 continued into the first quarter 2024 as the economy remained trapped in a high interest rate environment along with a volatile Rand exchange rate and premium fuel prices, all contributing to an affordability crisis faced by consumers of new vehicles,” said the organisation.
“Port congestion challenges still continued during the quarter, resulting in supply chain disruptions negatively impacting on costs, vehicle production, and new-vehicle sales.”
However, an easing in global inflation could see a softening in interest rates in the second half of 2024 which will support the South African automotive industry’s domestic sales and export performances, Naamsa concluded.
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