PRETORIA. South Africa – The SA National Association of Motor Manufacturers has warned that illegal grey imports of automobiles to South Africa now make up about 300 000 of the 12.7-million cars on our roads.
Worse, the total is growing by about 30 000 a year, and Naamsa says they are displacing legal new vehicle sales. The result is that not only is the country’s tax base losing R3.8bn a year but ”they hurt job creation, aid criminal activity, and undermine road safety initiatives”.
The monthly average new vehicle sales for 2020 is 28 500 units so ”grey” imports represent, each year, an extra month’s sales or 7.5% of the total market. That, numerically, makes grey imports the third-largest vehicle ”brand”.
EXPORTS DOWN TOO
Vehicle sales through September 2020 have been confirmed at 37 403 to show continued improvement through less intense Covid ”lockdowns” but still meant a decline of 11 737 (24%) from the 49 140 vehicles sold in September 2019.
Exports fell by 7566 units to 28 704 – down 21% from the 36 270 of September 2019.
Overall, of the reported industry sales of 37 403 vehicles (about 33 080 (or 88%) of represented dealer sales, five percent to government, an estimated four percent to rental companies and three percent to industry corporate fleets.
The September 2020 new car market at 22 798 units registered a drop of 10 322 (31%) compared to the 33 120 the previous September but rental sales accounted for ”a welcomed” contribution of 5.7%.
Domestic sales of new light commercials, bakkies and mini-buses at 12 267 units during September were down by 1202 (8.9%) from the 13 469 light commercials sold in the same month a year earlier.
Sales of medium and heavy trucks were weak at 680 units and 1658 units, respectively, a fall of 13.9% for medium commercials and, for heavy trucks and buses ,a decline of 103 or 5.8% compared to the corresponding month in 2019. September 2020 exports sales were 28 704 down by 7566 or 20.9% from the 36 270 exported in 2019.
‘FAR FROM NORMAL’
The performance year-to-date is down by 37.5% against the same period in 2019. The easing of lockdown restrictions to :Level 1 during the month contributed to an uptick in business and new-vehicle demand and drove the further improvement in business conditions in the South African manufacturing sector.
However, business conditions remain far from normal and the new vehicle market is expected to remain under pressure. Year to date, the new vehicle market has now contracted by 33.4% or 132 878 units from the same time in 2019.
An important avenue for government to support this key coronavirus-hit sector of the economy is to reduce tax on new vehicle purchases to hugely benefit business.
Vehicle exports continue to recover with the automotive industry’s major export destinations starting to ease their lockdowns. Going forward, South African vehicle exporters will be required to consider various scenarios for the world economy and global trade patterns in the short to medium term.