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)
15th May, 2006
Gentlemen,
QUARTERLY REVIEW OF BUSINESS CONDITIONS :
MOTOR VEHICLE MANUFACTURING INDUSTRY : 1ST
QUARTER, 2006
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 first quarter of 2006, 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.
Key features
First quarter, 2006 auto industry employment expanded by 1 047 jobs or a 3,0% improvement compared to the end of 2005.
Robust sales trend and positive undertone continues in the domestic market, however, monthly year on year growth during first four months of 2006 has slowed modestly.
The sharp increase in new vehicle exports on the back of ambitious new vehicle export programmes set to continue during the balance of 2006.
SA Automotive manufacturing industry capacity utilization levels remain close to all time records.
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
15th May, 2006
The Director-General
Private Bag X84
PRETORIA
0001
MANUFACTURING INDUSTRY : QUARTER ENDED 31st March, 2006
NAAMSA submits the following report on business conditions in the South African new motor vehicle manufacturing industry during the first quarter of 2006.
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 first quarter of 2006 may be set out as follows –
Industry Total
Last pay week January, 2006
35 577
Last pay week February, 2006
35 841
Last pay week March, 2006
36 184
Compared to the 35 137 positions at the end of 2005, aggregate industry employment levels increased by 1 047 jobs during the first quarter of 2006 to reach a total of 36 184 jobs – the highest aggregate industry level in the past eight and a half years.
Four major companies recruited new personnel during the first quarter of 2006. Employment at the other industry employers remained stable during the quarter.
The rapid expansion in industry employment during the first quarter of 2006 (1 047 new positions) comes on top of the 2 589 new jobs created during calendar 2005.
2. NUMBER OF SHIFTS
Most vehicle manufacturers 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 operate 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 first quarter of 2006, remained good.
During the quarter, the cost of imported components continued to benefit from the strong Rand. Prices from
source remained stable except for oil based products - rubber, plastics, lubricants – which continued
to be affected by increases in the price of crude oil. Shipping costs stabilized during the quarter.
Local Components
During the first quarter of 2006, some constraints
were reported, in a few instances, due to sustained higher local vehicle production volumes.
Local component prices remained relatively stable during the quarter.
3.2 RAW MATERIALS
Imported Materials
Generally, the availability of imported raw materials, where applicable, remained
good. Rising global commodity and oil prices continue to exert upward pressure on costs.
Imported steel prices remained stable during the quarter.
Local Materials
Local raw material price movements continue to mirror international pricing trends. Generally, the availability remains good. A price increase on some local automotive steel grades was implemented from the beginning of 2006.
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
Year
2005
1st Qtr
2006
1st Qt 2006 Range
High
Low
Cars
66,1%
72,2%
73,2%
77,2%
79,7%
81,1%
92,3%
113,0%
67,6%
Light Commercials
60,2%
62,6%
70,6%
69,6%
72,1%
79,9%
76,1%
99,0%
28,7%
Medium Commercials
64,2%
69,8%
67,8%
60,7%
57,2%
84,4%
94,6%
108,0%
88,0%
Heavy Commercials
74,8%
78,1%
85,7%
85,6%
86,0%
95,9%
95,0%
98,0%
92,0%
During the first quarter of 2006, industry average capacity utilisation levels remained at historically high levels.
The industry’s average capacity utilization levels are currently well above international benchmarks.
5. NEW INVESTMENT/INVESTMENT APPROVALS : 2005 ACTUAL AND 2006 PROJECTION
NAAMSA reports the industry’s aggregate capital expenditure on an annual basis. Details of actual industry capex for 2000 through 2005, in Rand millions, as well as the projection for 2006 – are as follows –
R Millions
Capital Expenditure
2000
2001
2002
2003
2004
2005
2006 Projection
Product/Local/Content/Export Investment/ Production Facilities
1 311,2
1 800,1
2 311,4
1 989,4
1 816,3
2 805,3
7 369,5
Land and Buildings
109,7
33,3
152,0
141,5
129,6
512,1
669,8
Support Infrastructure (I.T., R&D, Technical, etc.)
140,6
244,9
262,4
193,9
273,7
258,7
374,6
Total
1 561,5
2 078,3
2 725,8
2 324,8
2 219,6
3 576,1
8 413,9
Over the past two years, the strong Rand would have contributed to lowering the cost of imported capital equipment (machinery/production technology). In the case of one major OEM, some capital expenditure originally earmarked for 2005 would have been carried forward to 2006 as work in progress.
All the major seven OEM’s and two truck manufacturers participated in the survey. Seven manufacturers project increased capex for 2006.
6. BUSINESS CONDITIONS AND PERFORMANCE INDICATORS
Business Conditions : First Quarter, 2006
2006 first quarter passenger car sales at 104 174 units recorded an improvement of 18 249 units or 21,2% compared to the 85 925 new cars sold during the corresponding quarter for 2005. Combined commercial vehicle sales during the first quarter of 2006 at 50 990 units reflected a gain of 9 834 units or an improvement of 23,9% compared to 41 156 units sold during the corresponding quarter of 2005.
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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 31 March 2006 compared with previous Qtr ended 31 Dec 2005 |
Qtr ended 31 March 2006 compared with corresponding Qtr ended 31 March 2005 |
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Passenger Cars |
+ 5,7% |
(- 4,5%) |
+ 21,2% |
(+ 22,0%) |
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Light Commercial Vehicles |
+ 7,2% |
(- 6,0%) |
+ 23,7% |
(+ 22,4%) |
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Medium Commercial Vehicles |
- 7,2% |
(+ 2,3%) |
+ 25,7% |
(+ 38,0%) |
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Heavy Commercial Vehicles |
- 4,3% |
(- 9,7%) |
+ 25,2% |
(+ 18,9%) |
New vehicle sales during the first quarter of 2006 were characterised by further strong upward momentum with sales in all four sectors registering strong, 20% plus gains compared to the corresponding quarter in 2005.
The strength in the market continues to be influenced by the favourable interest rate environment, improved new vehicle affordability, attractive incentives offered by manufacturers and a positive macro economic environment.
New Vehicle Export Performance : First Quarter, 2006
2006 first quarter export sales of South African produced motor vehicles rose substantially to 38 541 units compared to 24 442 new vehicles exported during the first quarter last year – an improvement of 14 099 units or 57,7%.
Higher projected exports of cars and particularly light commercial vehicles should contribute to record export sales during 2006. Overall exports are projected to improve by over 50% year on year.
The following annual vehicle export statistics summarize the industry’s past and projected export sales performance -
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2000 |
2001 |
2002 |
2003 |
2004 |
2005 |
2006 (Projection) |
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Cars |
58 204 |
97 599 |
113 025 |
114 909 |
101 445 |
113 899 |
145 000 |
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Light Commercials |
9 148 |
10 229 |
11 699 |
11 283 |
9 360 |
25 589 |
65 000 |
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Medium & Heavy Commercials |
679 |
465 |
582 |
469 |
448 |
424 |
400 |
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Total Exports |
68 031 |
108 293 |
125 306 |
126 661 |
111 253 |
139 912 |
210 400 |
During 2005, South Africa was the best performing market internationally. Calendar 2006 is shaping up as another outstanding and record year for the South African new vehicle manufacturing industry with both domestic sales and production projected to rise to all time highs.
GDP growth of about 5%, strong business confidence, improving corporate profitability, positive consumer sentiment driven by low inflation, stable interest rates and improved vehicle affordability – should serve to support demand for new motor vehicles during 2006. Moreover, car rental business (boosted by higher levels of economic activity and tourism) and government business (driven by increased investment in infrastructure development and basic services delivery) should also contribute to higher demand for new cars and commercial vehicles.
Prospects generally remain positive and this is reflected in the projections in the attached schedule.
Yours sincerely,
N.M.W. VERMEULEN
DIRECTOR
sdb
15th May, 2006
Attachment 1 -
Industry Vehicle Sales, Export and Import Data :
1995 - 2007
(click to view)
Back to http://www.naamsa.co.za/papers/
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