The automotive industry has contributed to a much faster than expected recovery in manufacturing output in South Africa.
Manufacturing output grew by 32.2% seasonally adjusted in the third quarter of 2020 compared to the previous quarter and by 211.5% on an annualised basis. Absa economic research said this meant total output fell just 2.6% on a year-on-year basis in September 2020 compared to a decline of 11.1% in August 2020. The bank had projected a year-on-year decline of 6.6%.
Output rose in nine of the 10 reported sub-sectors, with only the output of “petroleum, chemical and rubber” declining by 1.5% month-on-month.
Across the major sub-sectors, the increase was led by “vehicles and parts” where seasonally adjusted output rose by 7.2% month-on-month in September 2020, “food and beverages” by 4.9% and “basic iron and steel” by 3.7%.
The quarterly review of business conditions in the new motor vehicle manufacturing industry/automotive sector released by the National Association of Automobile Manufacturers of South Africa (Naamsa) in October 2020 revealed that capacity utilisation levels for cars increased sharply to 71.6% in the third quarter of 2020 from 37.6% in the second quarter. Capacity utilisation for light commercial vehicles improved to 50.5% from 41.1% in the same period.
Naamsa CEO Mikel Mabasa said capacity utilisation levels during the third quarter of 2020 reflected the remaining COVID-19 lockdown restrictions, prevailing weak demand, a volatile rand exchange rate and negative sentiment in the various industry segments in terms of domestic sales.
Absa senior economist, Miyelani Maluleke, said that manufacturing output on an aggregate level is getting close to where it was before the lockdown restrictions kicked in.
But Maluleke believed it will be wrong to emphasise some of these growth rates because the base from which the sector is coming from is extremely low. He says the September 2020 total manufacturing output index level was only 3.7% below the January and February 2020 average and it is important to stress that the sector is definitely not quite back to where it was before the COVID-19 shock hit the country.
But Maluleke said the key thing is that there were huge concerns early in the year when this sector was already under a lot of pressure that “a shock like this would take a lot of firms down with it and we wouldn’t see a very fast recovery”.
“The significance of this recovery is that this sector is proving to be a little more resilient than many of us thought was the case in January, which is very encouraging,” he said.
Maluleke believes this recovery can be sustainable provided South Africa did not experience additional shocks to economic activity.
He said some of the downside risks Absa is concerned about have since started to materialise, such as the big second wave of COVID-19 infections across Europe, including some of South Africa’s key trading partners, such the UK and Germany, which are important destination markets for domestically produced cars.
Maluleke said a large proportion of SA’s automotive production is exported, and the second wave of COVID-19 lockdowns in Europe has the potential to negatively impact on manufacturing output in South Africa.
He stressed the sustainability of the manufacturing output recovery depends a lot on the nature of the recovery in the global economy and the recovery in domestic demand.
“It is an environment that still has a huge amount of risk out there. The external environment has been absolutely critical [to the recovery] and if the second wave of lockdowns is prolonged and starts to do real damage in those markets, there will be a significant negative impact [on South Africa],” he said.
Mitsubishi Motors has revived the Pajero name with the launch of the fifth generation Pajero Cross Country. The new model does not simply replace the previous Pajero that disappeared from the market in 2021. Its relationship with the Pajero Sport is equally important, particularly for markets such as South Africa.
Range Rover, long regarded as the original luxury SUV, has introduced its first electric model. The vehicle is built at the Solihull plant in the UK, where Range Rover production has taken place since 1970.
Audi South Africa has introduced the new Q5 range, comprising the third-generation Q5 SUV, second-generation Q5 Sportback, and the performance-focused SQ5 SUV and SQ5 Sportback. The range is built on Audi's Premium Platform Combustion and brings a new generation of petrol and diesel engines to the nameplate.
Advertisement
Advertisement
I have bad reflexes. I was once run over by a car being pushed by two guys
Woody Allen
The Toyota Starlet has improved from zero to a four-star rating for adult occupant protection in Global NCAP's latest #SaferCarsForAfrica crash test results. This follows a safety upgrade to make six airbags a standard fit.
Ford Motor Company of Southern Africa has released a new corporate manifesto that sets out its commitment to the country, its customers and its dealer network, alongside a renewed push to champion industrialisation as central to South Africa's future.
South Africa's new vehicle market sustained strong momentum in August 2026, with aggregate sales increasing by 11,4% year-on-year to 57 898 units, says the Automotive Business Councill | naamsa.
