NATIONAL
ASSOCIATION OF AUTOMOBILE MANUFACTURERS OF SOUTH AFRICA
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PO BOX 40611, ARCADIA 0007 |
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TELEPHONES: |
(012) 323-2980/1 – 323-2003 |
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TELEFAX: |
(012) 326-3232 |
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WEB ADDRESS: |
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E-MAIL ADDRESS: |
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OFFICES: |
1st FLOOR, NEDBANK PLAZA |
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Cnr CHURCH AND BEATRIX STREETS | |
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ARCADIA, PRETORIA 0083 |
N8/1 (e-mail)
24th October 2005
To :
REPRESENTATIVES AT GENERAL MEETINGS
Gentlemen,
QUARTERLY REVIEW OF BUSINESS CONDITIONS :
MOTOR VEHICLE MANUFACTURING INDUSTRY : 3rd QUARTER, 2005
ATTACHED, for information purposes, is a copy of NAAMSA’s quarterly review of business conditions for the South African motor vehicle manufacturing industry, during the third quarter of 2005, as submitted to the Director-General, Department of Trade and Industry.
Latest industry vehicle sales, export and import statistics for 1995 through 2007 are reflected on the attachment to the submission. The projections have been updated and reflect fairly significant changes from those of the previous quarter.
Key features
Ø Third quarter, 2005 auto industry employment expanded by 173 jobs on top of auto assembly industry employment growth of 3 068 jobs during preceding 18 months.
Ø Robust sales trend and positive undertone continues in the domestic market.
Ø Sharp increase in new vehicle exports, since the middle of 2005, on the back of ambitious new vehicle export programmes.
Ø SA Automotive manufacturing industry capacity utilization levels currently at all time records.
N.M.W. VERMEULEN
DIRECTOR
sdb
NATIONAL
ASSOCIATION OF AUTOMOBILE MANUFACTURERS OF SOUTH AFRICA
|
PO BOX 40611, ARCADIA 0007 |
|
TELEPHONES: |
(012) 323-2980/1 – 323-2003 |
|
TELEFAX: |
(012) 326-3232 |
|
WEB ADDRESS: |
|
|
E-MAIL ADDRESS: |
|
|
OFFICES: |
1st FLOOR, NEDBANK PLAZA |
|
Cnr CHURCH AND BEATRIX STREETS | |
|
ARCADIA, PRETORIA 0083 |
N8/1
24th
October, 2005
The Director-General
Private Bag X84
PRETORIA
0001
QUARTERLY REVIEW OF BUSINESS CONDITIONS : NEW VEHICLE
MANUFACTURING INDUSTRY : QUARTER ENDED 30th September, 2005
NAAMSA submits the following report on business conditions in the South African new motor vehicle manufacturing industry during the third quarter of 2005.
1. EMPLOYMENT LEVELS AND TRENDS
The number of persons employed by the South African new vehicle manufacturing industry – comprising all the major new vehicle manufacturers and specialist commercial truck manufacturers – during the third quarter of 2005 may be set out as follows –
Industry Total
Last pay week July, 2005
34 407
Last pay week August, 2005
34 591
Last pay week September, 2005
34 604
Compared to the 34 431 positions at the end of June 2005, aggregate industry employment levels increased by 173 jobs during the third quarter of 2005 to reach a total of 34 604 jobs – the highest aggregate industry level in the past seven years.
Two major companies recruited new personnel during the third quarter of 2005. Employment at all other industry employers remained stable during the quarter.
Since the beginning of 2004, 3 241 new jobs have been created in the industry – an increase of 10,3% in aggregate industry employment levels over the past 21 months.
2. NUMBER OF SHIFTS
The trend is for vehicle manufacturers to operate on a multi-shift basis in the production of vehicles and components for domestic and export markets. A number of manufacturers operate on a single production shift basis, whilst the majority operates double shifts in selected areas such as machining, press shops, paint shop operations and body shop. In some instances, three shift operations take place.
3. AVAILABILITY AND PRICE TRENDS OF COMPONENTS AND RAW MATERIALS
3.1 COMPONENTS
Imported Components
Overall, the availability and supply of imported original equipment components, during the third quarter, remained satisfactory.
Prices from source remained stable except for certain grades of steel and oil based products - rubber, plastics, lubricants – which continued to be affected by increases in the price of crude oil.
Local Components
During the third quarter of 2005, capacity constraints were noted, in certain instances, due to the tightening of supply of local components as a result of higher local vehicle production volumes. Local suppliers continue to invest in facility expansions to meet future projected demand requirements by vehicle manufacturers.
Whilst price increase requests have stabilised, domestic labour, steel and fuel costs, as well as increases in global material costs, continue to impact on local costs.
3.2 RAW MATERIALS
Imported Materials
Generally, the availability of imported raw materials, where applicable, remained good. Rising global commodity, material and oil prices continue to put some pressure on costs.
Local Materials
Local raw material price movements continue to mirror international pricing trends. Generally, the availability remains stable, however, instances of shortages of select local steel grades were noted.
Automotive steel pricing has stabilised. However, alternative sources of steel remain under investigation.
4. UTILISATION OF PRODUCTION CAPACITY
Average motor vehicle assembly industry capacity utilisation levels, for the periods indicated, may be illustrated as follows –
Year
2000
Year
2001
Year
2002
Year
2003
Year
2004
1st Qtr
2005
2nd Qtr
2005
3rd Qtr
2005
2nd Qt 2005 Range
High
Low
Cars
66,1%
72,2%
73,2%
77,2%
79,7%
78,2%
74,7%
85,2%
100,0%
48,1%
Light Commercials
60,2%
62,6%
70,6%
69,6%
72,1%
80,4%
80,6%
83,4%
100,0%
52,9%
Medium Commercials
64,2%
69,8%
67,8%
60,7%
57,2%
70,0%
88,6%
89,5%
100,0%
79,0%
Heavy Commercials
74,8%
78,1%
85,7%
85,6%
86,0%
98,6%
98,0%
95,7%
100,0%
88,0%
During the third quarter, industry capacity utilisation levels rose to record or near record levels.
The South African new manufacturing industry’s average capacity utilization levels are currently well above international benchmarks.
5. NEW INVESTMENT/INVESTMENT APPROVALS : 2004 ACTUAL AND 2005 PROJECTION
NAAMSA reports the industry’s aggregate capital expenditure on an annual basis. Details of actual industry capex for 2000 through 2004, in Rand millions, as well as the projection for 2005 – are as follows –
R Millions
Capital Expenditure
2000
2001
2002
2003
2004
2005 Projection
Product/Local/Content/Export Investment/ Production Facilities
1 311,2
1 800,1
2 311,4
1 989,4
1 816,3
5 095,7
Land and Buildings
109,7
33,3
152,0
141,5
129,6
200,7
Support Infrastructure (I.T., R&D, Technical, etc.)
140,6
244,9
262,4
193,9
273,7
624,0
Total
1 561,5
2 078,3
2 725,8
2 324,8
2 219,6
5 920,4
During 2004, the strong Rand would have translated into lower costs of imported capital equipment (machinery/production technology). Also, some capital expenditure originally earmarked for 2004 may have been deferred to 2005.
All the major OEM’s and three truck manufacturers participated in the survey. Six manufacturers project increased capex for 2005, with one major OEM accounting for over half the industry’s projected investments.
6. BUSINESS CONDITIONS AND PERFORMANCE INDICATORS
Business Conditions : Third Quarter, 2005
New vehicle sales during the third quarter of 2005 registered new records.
2005 third quarter passenger car sales at 103 132 units recorded a further substantial improvement of 19 475 units or 23,2% compared to the 83 657 new cars sold during the corresponding quarter for 2004. Combined commercial vehicle sales during the third quarter of 2005 at 51 416 units reflected a gain of 11 582 units or an improvement of 29,0% compared to 39 834 units sold during the corresponding quarter of 2004.
The industry’s 2005 third quarter performance represents the best ever quarterly new vehicle sales recorded. The industry’s sectoral quarterly performance is set out in the table hereunder -
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Industry Domestic Sales Growth : Direction and Extent of Change (Previous quarter’s percentage changes are reflected in brackets) |
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Qtr ended 30 Sept 2005 compared with previous Qtr ended 30 June 2005 |
Qtr ended 30 Sept 2005 compared with corresponding Qtr ended 30 Sept 2004 |
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Passenger Cars |
+ 15,5% |
(+ 3,9%) |
+ 23,2% |
(+ 33,3%) |
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Light Commercial Vehicles |
+ 9,3% |
(+ 12,3%) |
+ 28,7% |
(+ 36,9%) |
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Medium Commercial Vehicles |
- 0,06% |
(+ 32,4%) |
+ 27,3% |
(+ 62,5%) |
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Heavy Commercial Vehicles |
+ 15,0% |
(+ 26,1%) |
+ 34,6% |
(+ 26,5%) |
New vehicle sales during the third quarter of 2005 reached record levels reflecting further exceptional upward momentum with sales in all four sectors registering strong, double digit gains compared to the corresponding quarter in 2004. Sales of new commercial vehicles again showed stronger growth relative to new car sales.
Export Performance : Third Quarter, 2005
As anticipated, exports of South African produced motor vehicles rose substantially, during the quarter, as a result of existing and new export projects. The following aggregate vehicle export figures are relevant -
Total New Vehicle Exports |
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2005 |
2004 |
Percentage 2005 / 2004 |
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July |
12 090 |
8 699 |
+ 39,0% |
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August |
14 691 |
14 947 |
- 1,7% |
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September |
17 509 |
10 231 |
+ 71,1% |
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Third Quarter |
44 290 |
33 877 |
+ 30,7% |
Higher exports of light commercial vehicles should contribute to record export sales during 2005.
The following vehicle export statistics further summarize the industry’s export sales performance, in historical context -
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1997 |
1998 |
1999 |
2000 |
2001 |
2002 |
2003 |
2004 |
Jan-Sept 2004 |
Jan-Sept 2005 |
2005 (Projection) |
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Cars |
10 458 |
18 342 |
52 292 |
58 204 |
97 599 |
113 025 |
114 909 |
101 445 |
77 558 |
81 405 |
118 000 |
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Light Commercials |
8 000 |
6 808 |
6 504 |
9 148 |
10 229 |
11 699 |
11 283 |
9 360 |
7 125 |
14 374 |
25 000 |
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Medium & Heavy Commercials |
1 111 |
748 |
787 |
679 |
465 |
582 |
469 |
448 |
308 |
334 |
400 |
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Total Exports |
19 569 |
25 898 |
59 583 |
68 031 |
108 293 |
125 306 |
126 661 |
111 253 |
84 991 |
96 113 |
143 400 |
Industry Prospects : Full Year Substantial Improvement In Domestic New Vehicle Sales and Vehicle Exports to grow significantly through 2006
The record growth trend in South African new vehicle sales is expected to continue into 2006. For 2005, the market will record, for the second successive year, record sales. A combination of strong economic fundamentals should serve to support the positive momentum in the South African economy and demand for new motor vehicles during 2005 and beyond. However, any increase in interest rates is likely, in due course, to slow the domestic markets’ growth momentum.
Going forward, exports of South African vehicles will continue to be boosted by the various new export programmes in addition to the established export projects.
Prospects generally remain positive and this is reflected in the projections in the attached schedule. These projections have been revised and updated and reflect fairly significant changes from those issued at the end of the second quarter.
Yours sincerely,
N.M.W. VERMEULEN
DIRECTOR
sdb
24th October, 2005
Attachment 1 -
Industry Vehicle Sales, Export and Import Data :
1995 - 2007
(click to view)
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