South African vehicle exports on a downward curve after record 2023
South Africa’s vehicle exports hit a record high of 396,000 units in 2023 thanks to strong international demand for locally made products such as the Volkswagen Polo, Mercedes C-Class and Toyota Hilux.
However 2024 is turning out to be an export year that some manufacturers would rather forget, with the industry recording year-on-year declines for six of the eight months to date.
Our calculations, based on monthly figures released by Naamsa, show that South African vehicle exports declined by 17.7% from January to August 2024, versus the same period in 2023. July and August saw particularly worrying year-on-year drops of 34% and 33% respectively.
Naamsa attributes the most recent export declines to weak regional economic activity in Europe, which is the country’s main export destination. SA’s export decline also comes in spite of a substantial year-to-date increase of 132% for exports to the US.
The industry body for local manufacturers said it expects momentum to pick up in the final months of 2024 following interest rate cuts that are anticipated for the country’s top export destinations.
But is there more to this than meets the eye?
The Volkswagen Polo was South Africa’s top vehicle export in the first quarter with 24,268 units shipped abroad, but June, July and August saw a combined export volume of just 9,997 units.
Toyota Hilux exports from South Africa declined from 8,955 units in the first quarter to 5,753 in the past three months, but Mercedes C-Class exports increased from 16,168 units to 22,300, while the Ford Ranger (14,180 to 20,285) and BMW X3 (16,154 to 20,035) also saw substantial increases in export sales. That is in spite of the latter being phased out for the launch of the new-generation model.
SA’s top vehicle exports in August were the Ford Ranger (8,123), Mercedes C-Class (7,600) and BMW X3 (6,400).
In June, Mercedes SA said it had begun talks to restructure its East London manufacturing plant, stating that it could cut 700 jobs by reducing its daily shifts from three to two due to lower international demand for the C-Class sedan.
Volkswagen SA, which exported its 1.5 millionth vehicle earlier this year, appears to be in a somewhat better situation with its Polo export contract. In February the company announced that it planned to increase Polo production by about 10,000 units this year to 150,000 units, primarily for export, as the Kariega plant in the Eastern Cape was set to become the world’s sole export factory for Polo hatchbacks.
Is the recent decline in export sales merely a temporary glitch in that plan? We have reached out to VWSA for comment, and will update the story in due course.
Internationally Volkswagen has been hit by a downturn in the European market, where it enjoys the region’s biggest market share. Thousands of Volkswagen employees protested earlier this week after executives said they were considering closing two plants in Germany, an unprecedented move.
The future of VW’s South African plant appears to be safe for the time being at least, with Polo exports looking set to continue until 2030. The company also recently invested R4 billion to build a new Polo-based SUV in South Africa to help lessen its reliance on Euro zone exports.
IOL Motoring