Firing Up A Vital Economic Engine

South Africa’s carmakers are finally able to start their engines, but the effects of COVID-19 constraints on operations have caused significant drag for the industry

- Glenda Williams

South Africa’s automotive industry can finally start its engine. Albeit still on idle, vehicle production is gradually beginning to ramp up and dealerships have at last been given the green light to trade.

The automotive industry is vital to the economic health and welfare of SA and its citizens. The industry, both manufacturing, and retail contributed R500bn in revenue to the country last year (2018: R503bn) and 6.9% to GDP (4.4% manufacturing; 2.5% retail). It is also responsible for around 457 000 jobs.

It is a manufacturing mainstay for SA’s economy, accounting for 30.1% of manufacturing output, with vehicle production last year rising to 631 983 units while exports of vehicles (387 125) and automotive components accounted for R201.7bn, according to the National Association of Automobile Manufacturers of South Africa (Naamsa).

But the coronavirus lockdown slammed the brakes on vehicle manufacturing, sales and exports. The toll has been heavy, the effects of which will resonate for some time to come.

“The industry’s significant 6.9% contribution to GDP means that many jobs are potentially impacted, across manufacturing and retail, as is foreign currency revenue from exports. Mobility plays a vital role in providing the necessary stimulus to all sectors of the economy,” says Lebogang Gaoaketse, head of marketing and communication at WesBank.

New car sales in April, when SA’s lockdown was in full effect, plunged a staggering 98.4% compared with the same period last year, according to Naamsa. Only 574 vehicles were sold against 36 787 units in April 2019.

Exports plummeted by 97.3% with just 901 units leaving SA’s shores, in contrast to the 32 828 units in April 2019.