Business Maverick

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SA Q3 auto production hit by July unrest, sales remain below pre-pandemic levels

The assembly line at a Lucid Motors plant in Newark.

According to the Automotive Business Council's latest quarterly review of business conditions, vehicle production in South Africa fell over 21% in the three months to the end of September compared to the same period last year. This was partly owing to outbreak of unrest in July. New vehicle sales meanwhile remain below pre-pandemic levels. 

The Automotive Business Council, also known as Naamsa, said that the fall in production “could be attributed to adverse events that occurred during the quarter in the country as well as the ongoing Covid-19 related global supply chain disruptions.” 

The “adverse events” included the wave of looting and rioting that rocked Gauteng and KZN in July – an outbreak of unrest that killed over 300 people and took a huge toll on the economy which is still being tallied. The economy almost certainly contracted in the quarter though the Treasury still expects gross domestic product (GDP) growth of 5.1% for 2021. Needless to say, the forecast would be rosier were it not for the surge of violence.

During the third quarter (Q3), 100,221 vehicles were made in South Africa, compared to 127,200 in the same period last year, a decline of 21.2%. 

Vehicle production in South Africa and across the globe has also been hampered the on-going shortage of semi-conductors and wider supply-chain bottlenecks that have emerged because of the pandemic. Such shortages are also pushing up the prices of second-hand vehicles at the upper end of the market. 

New vehicle sales in South Africa by contrast rose 14.7% during the quarter compared to the corresponding period in 2020. This was driven by a number of factors including the return of rental companies to the market, but the sector remains weak – one would expect a rise after the terrible performance that marked 2020. 

Compared to Q3 2019 – a more meaningful contrast – new vehicle sales in South Africa in Q3 2021 were 16.1% lower. So like much of the rest of the economy, this sector remains below pre-pandemic levels. Real growth will be seen when 2019 sales numbers are finally surpassed.  DM/BM



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