Summarize

Toyota’s 2019 State of the Motor Industry address delivered some sober predictions alongside a few exciting prospects as TSAM CEO Andrew Kirby predicted that only 550 000 new vehicles will be sold in SA in 2019 . Kirby also confirmed that the first three quarters of 2018 brought an inflow of R70 billion of foreign investment, while FNB’s Mamello Matikinca-Ngwenya explained that  2019 will essentially be a year of two halves and Deloitte’s Dr Martyn Davies reaffirmed that Africa is not a dumping ground for second-hand vehicle products

Kirby expects total vehicle sales to continue on their downward trajectory that began in 2013, while Matikinca-Ngwenya explained that, “We are expecting a benign economy heading into the elections off weak business confidence due to political uncertainty. “Businesses is likely to stay on the sidelines until after the May 8 elections before business confidence starts to improve – investment of course follows that.”     

Both the World Bank and the South African Reserve Bank predict local economic growth to be less than 2% based on a variety of socio-economic factors – doesn’t bode well for the local motor industry. The automotive sector currently contributes 7% to local GDP, constitutes 30% of South Africa’s total manufacturing output, is responsible for 14% of total exports and employs 112 000 people in the vehicle and component production.

However, the figures pale in comparison to the targets set by the industry and the government in the recently-announced South African Automotive Masterplan 2035 –an extension of the Automotive Production and Development Programme that plans to double the number of people working in the SA automotive industry by 100% from 112 000 to 224?000 and double the percentage of vehicles assembled in South Africa to 1.4 million and 1% of the global output.

 

The Masterplan will replace the APDP from 2021 to 2035. “While the auto industry appreciates the government’s continued support of the sector, there are a number of focus areas that need to be addressed for it to succeed,” Kirby explained. “These include lack of infrastructure such as stable and competitive ports and rail, as well as the maintenance of urban roads. 

“The quality of South African fuel is also poor, which in turn, could hinder the availability of world-class vehicle engines, while there are also concerns about technology disruptors and how they’re likely to influence customer needs. However, one of the main challenges to domestic market stimulation is the relatively high tax structure that makes vehicle ownership almost impossible for many.”

“Africa offers a good prospect for local vehicle manufacturers, however the proliferation of used cars from overseas markets is a threat.” Dr  Davies added. “Africa is not a dumping ground for second-hand vehicles,” 

“Fifty percent of new cars sold in Africa are produced by Toyota South Africa Motors,” Kirby concluded. “We already have a strong foothold as we currently export to 42 countries on the continent.”