Blackouts keep car sector idling

Load-shedding is jeopardising efforts to grow the SA motor industry by discouraging foreign investment and potentially costing companies billions of rand in lost exports, industry leaders have warned. Mikel Mabasa, CEO of Naamsa, on Wednesday described “destructive” load-shedding as “the biggest inhibitor to the [motor] industry’s localisation ambitions”.

Load-shedding is jeopardising efforts to grow the SA motor industry by discouraging foreign investment and potentially costing companies billions of rand in lost exports, industry leaders have warned.

Mike Mabasa, CEO of the Naamsa, on Wednesday described “destructive” load-shedding as “the biggest inhibitor to the [motor] industry’s localisation ambitions”.

He said it is undermining plans “to create sustainable jobs within the auto sector and attract investment opportunities ... to grow the SA economy”.

Renai Moothilal, director of the National Association of Automotive Components and Allied Manufacturers (Naacam), said that besides losing local business, components suppliers could lose valuable export contracts if they fail to fulfil orders.

“At the same time as they are expressing sympathy for our suppliers problems, export customers are looking around the world to see where else they can find suppliers,” Moothilal said.

He added that newcomers to the industry, many of them black entrepreneurs encouraged by the government to enter the automotive sector, are facing a particularly tough time trying to survive because of the additional costs they face. The government has made black transformation one of the pillars of its automotive policy.

Toyota SA CEO Andrew Kirby said last week that some of his company’s suppliers were in crisis. He singled out steel foundries where, after a loadshedding spell ends, it takes two hours or more for foundry temperatures to return to working levels, only to be switched off again a few hours later when the next power cuts hit.

Mabasa and Moothilal were speaking after the release of new-vehicle sales figures showing a cautious start to 2023. Aggregate sales of cars and commercial vehicles in January were 43,509, 4.8% more than the 41,503 of January 2022.

The increase confirmed that after full-year increases of 22% in 2021 and 14% in 2022, the market is set for a period of restrained growth. Kirby predicted the full-year market will grow 7.8% in 2023.

On Tuesday, UD Trucks marketing head Rory Schulz said growth for medium and heavy trucks would be 2%-5%.

WesBank marketing head Lebogang Gaoaketse said yearon-year growth has returned to “more sensible and realistic levels” after two years of post Covid-19 rebound.

New-car sales improved 2.9%in January from a year earlier, from 30,199 to 31,072. Light commercials, mainly bakkies and minibus taxis, grew 10.4%, from 9,624 to 10,622. Among heavier vehicles, medium trucks outperformed January 2022 by 2.9%, heavy trucks fell 2.4% and extra-heavies grew 12.3%.

Mark Dommisse, chair of the National Automobile Dealers Association, said: “This market is difficult to read, given all the disruptive external factors now in play. We believe the public is adjusting its spend downwards but, conversely, the upper end of the market is remaining surprisingly strong at the same time.”

He added: “The current talk of another state of disaster, relating to the electricity crisis, presents another imposition for SA and the automotive industry as it pushes buyers into taking more conservative approaches in their buying cycles.”

DESTRUCTIVE LOAD-SHEDDING IS THE BIGGEST INHIBITOR TO THE MOTOR INDUSTRY’S LOCALISATION AMBITIONS

BLACKOUTS JEOPARDISE GROWTH BY DISCOURAGING FOREIGN INVESTMENT AND POTENTIALLY COSTING BILLIONS IN LOST EXPORTS

Vehicle exports disappointed in January, falling 1.8% compared with January 2022 — from 20,903 to 20,536. MercedesBenz SA, which was forced to cut C-Class car production in January due to a shortage of imported semiconductor microchips, saw its monthly exports total fall to fewer than 800, after exceeding 8,000 in previous months.

Ford Ranger shipments tumbled in January after production of the former model ended late in 2022. The company said on Wednesday that exports of the new vehicle have begun.