THE global automotive industry at present is at an important crossroads. OEMs will need to accelerate the development of a new New Energy Vehicle (NEV) business, while simultaneously running the legacy Internal Combustion Engine ( ICE) vehicle business, says Dr Norman Lamprecht. Lamprecht is executive manager at the Automotive Business Council, naamsa; and a director on the board of the Automotive Industry Export Council (AIEC).
He says that to achieve this business-model duality, OEMs, as well as their component suppliers, will need to make dramatic changes and fundamentally reshape their business models. The imminent demand for eco-friendly vehicles in traditional markets means that the transition to NEVs is inevitable for the export-oriented domestic automotive industry, and it will need to commence with making significant investments in innovation and NEV technology.
NEVs represent a huge ecosystem and with the transition to eco-friendly vehicles, the domestic automotive industry’s collective success has never been so closely tied to engagement with other sectors of the economy and across government. The future of the industry depends on all stakeholders, policy makers, businesses and consumers advancing to the same destination and thereby changing the way the world drives.
Lamprecht was commenting on the South African automotive industry’s “rocky” road to recovery after the lifting of Covid restrictions. He notes that, although the domestic automotive industry’s recovery to pre-pandemic levels continued in 2022, it was at a slower pace than in 2021 and many key performance indicators still remained below the pre-pandemic levels. On the trade side, he says, the industry reflected a sound performance as highlighted in the 2023 Automotive Export Manual publication released by the AIEC.
A selection of highlighted stats and trends quoted from the manual include the following:
Domestic demand
Lamprecht notes that the trading environment in South Africa is extremely competitive compared to global standards, and in 2022 there were no less than 43 passenger car brands and 2 513 model derivatives, the greatest selection of market-size ratio found globally. Similarly, in the bakkie segment, for the same period, there were 22 brands, with 498 model derivatives to choose from. Total new vehicle revenue, based on the available list price, amounted to R255,7 billion in 2022.
Out of the top 10 selling models in 2022, seven were South African manufactured models of which four were bakkies and three passenger cars. NEV sales reflected a significant year-on-year increase of 421,7% from 896 units in 2021 to 4 674 units by 15 brands in 2022. Sales of battery electric vehicles breached the 500 units per year mark in South Africa for the first time, with
sales of 502 units in 2022. However, despite the massive increase, NEV sales still only comprised a fraction of a percent at 0,88% of the total new vehicle market in 2022.
A global market
There is a strong relationship between imports and exports in the South African automotive industry. Successful exporters have also been likely to import a significant portion of their inputs under the APDP and APDP2. In 2022, imports of light vehicles increased by a substantial 61 519 units, or 23,5%, from the 262 281 units in 2021 to 323 800 units and originated from 23 countries.
The top country of origin for passenger cars and bakkies imported into South Africa in 2022 was India, with 165 910 vehicles, accounting for 51,2% of the total light vehicles imported, while China moved into second place accounting for 10,8%, as Chinese brands continued to gain traction.
SA drops a place
South African vehicle production increased by 11,8%, from 499 087 units produced in 2021 to 555 889 units produced in 2022, exceeding the global year-on-year increase in global vehicle production of 6,0% in 2022. The country’s global vehicle production market share thus increased to 0,65%, but its global vehicle production ranking declined from 21st to 22nd, as Malaysia, ranked at number 20, surpassed South Africa in the global rankings.
In terms of global bakkie production, South Africa was ranked 16th with a market share of 1,1%. South Africa remained the dominant market on the African continent, and accounted for 555 889 vehicles, or 54,4% of the total African vehicle production of 1 022 783 vehicles in 2022.
NEVs up and ICE down
In 2022, ICE vehicle sales continued to decline but NEV sales accelerated in major markets, reaching a further record in 2022 with 10,5 million vehicles sold, an increase of 55% compared to 2021. As the race to full electrification continues, China, Europe and the US accounted for about 95% of the global electric vehicle sales.
The European Union (EU) and the UK, as a bloc, remained South Africa’s largest export region in 2022, accounting for R133,2 billion, or 58,6%, of total automotive exports of R227,3 billion in 2022. Both the UK and the EU have announced a ban on the sale of new ICE vehicles from 2030 and 2035, respectively.
Considering that 45,4% of the total automotive component export value, and three out of every four vehicles exported were destined for the EU and the UK in 2022, developments in the region have a measurable and direct impact on the South African automotive industry. Africa represented the domestic automotive industry’s second largest export region with exports amounting to R34,9 billion, of which 86,2% comprised exports to neighbouring countries in SADC, which is a free trade area.
New markets
In 2022, the top export destinations for domestically manufactured vehicles and automotive components remained markets in the Eurozone, as well as the US. However, diversification into new emerging markets is a continuing trend and underlines the automotive industry’s competitiveness drive and the continuous widening of the country’s traditional trading base. Major markets such as Brazil, Singapore, Philippines and Indonesia counted under the 29 countries to which the automotive export values more than doubled on a year-on-year basis in 2022.
In 2022, automotive component exports increased by 1,6% to a record R70,3 billion, up from R69,2 billion in 2021. Catalytic converters remained the top automotive component exported from South Africa and comprised 48,3% of total automotive component exports, followed by engine parts, tyres and radiators and parts. Germany and other developed markets have remained the South African automotive industry’s top export destinations for component exports over the past three decades.
The 2023 Automotive Export Manual publication released by the AIEC can be downloaded as a PDF.
