NAAMSA - 2005 QUARTERLY REVIEW OF BUSINESS CONDITIONS - by RGT

NATIONAL ASSOCIATION OF AUTOMOBILE MANUFACTURERS OF SOUTH AFRICA 

PO BOX 40611, ARCADIA 0007

TELEPHONES:

(012) 323-2980/1 – 323-2003

TELEFAX:

(012) 326-3232

WEB ADDRESS:

www.naamsa.co.za

E-MAIL ADDRESS:

naamsa@iafrica.com

OFFICES:

1st FLOOR, NEDBANK PLAZA

Cnr CHURCH AND BEATRIX STREETS

ARCADIA, PRETORIA 0083

                 

                    

 N8/1 (e-mail)

10th August 2005 

To :     REPRESENTATIVES AT GENERAL MEETINGS

Gentlemen,

QUARTERLY REVIEW OF BUSINESS CONDITIONS :

MOTOR VEHICLE MANUFACTURING INDUSTRY : 2nd QUARTER, 2005

ATTACHED, for information purposes, is a copy of NAAMSA’s quarterly review of business conditions for the South African motor vehicle manufacturing industry, during the first quarter of 2005, as submitted to the Director-General, Department of Trade and Industry.

Latest industry vehicle sales, export and import statistics for 1995 through 2007 are reflected on the attachment to the submission.  The projections are unchanged from those of the previous quarter.

Key features         

 

N.M.W. VERMEULEN

DIRECTOR

sdb  

NATIONAL ASSOCIATION OF AUTOMOBILE MANUFACTURERS OF SOUTH AFRICA 

PO BOX 40611, ARCADIA 0007

TELEPHONES:

(012) 323-2980/1 – 323-2003

TELEFAX:

(012) 326-3232

WEB ADDRESS:

www.naamsa.co.za

E-MAIL ADDRESS:

naamsa@iafrica.com

OFFICES:

1st FLOOR, NEDBANK PLAZA

Cnr CHURCH AND BEATRIX STREETS

ARCADIA, PRETORIA 0083

N8/1    

10th August, 2005

                                                                                                                         

The Director-General  

Department of Trade and Industry

Private Bag X84

PRETORIA

0001

Dear Sir,

 

QUARTERLY REVIEW OF BUSINESS CONDITIONS : NEW VEHICLE

MANUFACTURING INDUSTRY : QUARTER ENDED 30th June, 2005

 

NAAMSA submits the following report on business conditions in the South African new motor vehicle manufacturing industry during the second quarter of 2005. 

1.   EMPLOYMENT LEVELS AND TRENDS

The number of persons employed by the South African new vehicle manufacturing industry – comprising all the major new vehicle manufacturers and specialist commercial truck manufacturers – during the second quarter of 2005 may be set out as follows –

 

 

 

Industry Total

 

Last pay week April, 2005

34 071

Last pay week May, 2005

34 188

Last pay week June, 2005

34 431

Compared to the 33 658 positions at the end of March 2005, aggregate industry employment levels increased by 773 jobs during the second quarter of 2005 to reach a total of 34 431 jobs – the highest level in the past seven years.

Two companies recruited new personnel during the second quarter of 2005.  Employment at other major industry employers remained stable during the quarter.

Since the beginning of 2004 (i.e. over the past year and a half) 3 068 new jobs have been created in the industry.

 

2.   NUMBER OF SHIFTS

Most manufacturers operate on a multi-shift basis in the production of vehicles and components for domestic and export markets.  The balance of the industry operates on a single production shift basis with a number of manufacturers operating double shifts in selected areas such as machining, press shops, paint shop operations and body shop.

 

3.   AVAILABILITY AND PRICE TRENDS OF COMPONENTS AND RAW MATERIALS

3.1     COMPONENTS

          Imported Components

Overall, the availability and supply of imported original equipment components, during the quarter, remained satisfactory. 

Prices from source remained stable except for rising global steel prices and oil based products (rubber, plastics, lubricants).

          Local Components 

During the second quarter of 2005, there were recurrent signs of a tightening of supply of local components due to higher local production volumes.  Local suppliers are increasingly investing in facility expansions to meet the future demand requirements by vehicle manufacturers.   

On pricing, local suppliers continue to experience challenges in competing with imported products which benefit from the strong Rand.  Rising domestic labour, steel and fuel costs, as well as increases in global material costs, continue to represent the biggest impact on local costs. 

3.2     RAW MATERIALS 

          Imported Materials 

Generally, the availability of imported raw materials, where applicable, remained good.  Higher global commodity, material and oil prices continue to put pressure on costs. 

          Local Materials 

Local raw material price movements continue to mirror international pricing trends. Generally, the availability remains stable, however, instances of shortages of local steel were again reported. 

The increase in prices of automotive steel continue to have a knock on effect on local component pricing and vehicle production costs, despite cost cutting efforts by vehicle manufacturers in other areas.  A number of vehicle manufacturers report that alternative sources of steel are under investigation.

 

4.   UTILISATION OF PRODUCTION CAPACITY 

Average motor vehicle assembly industry capacity utilisation levels, for the periods indicated, may be illustrated as follows –

 

 

Year

2000

Year

2001

Year

2002

Year

2003

Year

2004

1st Qtr

2005

2nd Qtr

2005

2nd  Qt 2005 Range

High

Low

Cars

66,1%

72,2%

73,2%

77,2%

79,7%

78,2%

74,7%

111,0%

34,6%

Light Commercials

60,2%

62,6%

70,6%

69,6%

72,1%

80,4%

80,6%

100,0%

47,4%

Medium Commercials

64,2%

69,8%

67,8%

60,7%

57,2%

70,0%

88,6%

100,0%

83,0%

Heavy Commercials

74,8%

78,1%

85,7%

85,6%

86,0%

98,6%

98,0%

100,0%

96,0%

 

During the second quarter, industry capacity utilisation levels throughout the industry remained at record or near record levels.

 

5.   NEW INVESTMENT/INVESTMENT APPROVALS : 2004 ACTUAL AND 2005 PROJECTION 

NAAMSA reports the industry’s aggregate capital expenditure on an annual basis.   Details of actual industry capex for 2000 through 2004, in Rand millions, as well as the projection for 2005 – are as follows –

 

 

R Millions

Capital Expenditure

2000

2001

2002

2003

2004

2005 Projection

Product/Local/Content/Export Investment/ Production Facilities

1 311,2

1 800,1

2 311,4

1 989,4

1 816,3

5 095,7

Land and Buildings

109,7

33,3

152,0

141,5

129,6

200,7

Support Infrastructure (I.T., R&D, Technical, etc.)

140,6

244,9

262,4

193,9

273,7

624,0

Total

1 561,5

2 078,3

2 725,8

2 324,8

2 219,6

5 920,4

 

During 2004, the strong Rand would have translated into lower costs of imported capital equipment (machinery/production technology).  Also, some capital expenditure originally earmarked for 2004 may have been deferred to 2005. 

All the major OEM’s and three truck manufacturers participated in the survey.  Six manufacturers project increased capex for 2005, with one major OEM accounting for over half the industry’s projected investments. 

 

6.    BUSINESS CONDITIONS AND PERFORMANCE INDICATORS 

Business Conditions : Second Quarter, 2005  

New vehicle sales during the second quarter of 2005 registered new records. 

2005 second quarter passenger car sales at 89 282 units recorded a further substantial improvement of 22 335 units or 33,3% compared to the 66 947 new cars sold during the corresponding quarter for 2004.  Combined commercial vehicle sales during the second quarter of 2005 at 47 109 units reflected a gain of 12 842 units or an improvement of 37,5% compared to 34 267 units sold during the corresponding quarter of 2004.  

The industry’s 2005 second quarter performance represents the best ever quarterly new vehicle sales recorded.  The industry’s sectoral quarterly performance is set out in the table hereunder -

 

Industry Domestic Sales Growth : Direction and Extent of Change

(Previous quarter’s percentage changes are reflected in brackets)

 

Qtr ended 30 June 2005 compared with previous Qtr ended 31 March 2005

Qtr ended 30 June 2005 compared with corresponding Qtr ended 30 June 2004

Passenger Cars

+ 3,9%

(+ 6,5%)

+ 33,3%

(+ 23,0%)

Light Commercial Vehicles

+ 12,3%

(+ 6,1%)

+ 36,9%

(+ 16,0%)

Medium Commercial Vehicles

+ 32,4%

(+ 1,9%)

+ 62,5%

(+ 44,2%)

Heavy Commercial Vehicles

+ 26,1%

(- 9,1%)

+ 26,5%

(+ 16,6%)

 

New vehicle sales during the second quarter of 2005 reached record levels showing exceptional upward momentum with sales in all four sectors registering strong, double digit gains compared to the corresponding quarter in 2004.  Sales of new commercial vehicles showed stronger growth relative to new car sales. 

Export Performance :  Second Quarter, 2005 

The following vehicle export statistics summarize the industry’s export sales performance -

 

 

1997

1998

1999

2000

2001

2002

2003

2004

1st Half 2004

1st Half 2005

2005

(Projection)

Cars

10 458

18 342

52 292

58 204

97 599

113 025

114 909

101 445

46 405

43 289

120 000

Light Commercials

8 000

6 808

6 504

9 148

10 229

11 699

11 283

9 360

4 533

4 779

25 000

Medium & Heavy Commercials

1 111

748

787

679

465

582

469

448

176

224

500

Total Exports

19 569

25 898

59 583

68 031

108 293

125 306

126 661

111 253

51 114

48 292

145 500

 

Although at the mid year mark aggregate industry exports were some 5,5% behind the corresponding total for the six months in 2004, vehicle exports should receive a significant boost from about the middle of 2005 onwards, as a result of the commencement of various new export programmes. 

Industry Prospects For 2005 : Further Substantial Improvement In New Vehicle Sales Expected  

The exceptionally strong growth trend in South African new vehicle sales is expected to continue throughout 2005 and into 2006 with the market recording, for the second successive year, record sales. A combination of strong  economic fundamentals will serve to support the positive momentum in the South African economy and demand for new motor vehicles during 2005 and beyond. 

Domestic new vehicle sales are expected to improve, in volume in terms, by at least 20% during 2005.  

Prospects for 2005 and beyond remain positive and this optimism is reflected in the projections reflected in the attached schedule.  These projections remain unchanged from those issued at the end of the first quarter.

 

Yours sincerely,  

N.M.W. VERMEULEN

DIRECTOR

sdb

10th August, 2005

   

Attachment 1  -  Industry Vehicle Sales, Export and Import Data :  1995 - 2007
(click to view)

Back to http://www.naamsa.co.za/papers/ 


CREATED, DESIGNED AND HOSTED BY RESPONSE GROUP TRENDLINE   (041) 503 8800   e-mail support@response.co.za