2014 Capital Expenditure in Automotive Industry put at R7.9 Billion

OCTOBER 27, 2014

Projected aggregate capital expenditure in the automotive industry this year is put at more than R7.9 billion, according to the National Association of Automobile Manufacturers (Naamsa) Quarterly Review of Business Conditions for the 3rd Quarter of 2014.

This is nearly R4.6 million more than in 2013.

Naamsa says the aggregated data is based on capital expenditure details supplied by the seven major vehicle manufacturers and various truck producers.

It points out that a proportion of the capital expenditure originally earmarked for 2013 was carried forward to this year.

The Association explains that “the relatively high levels of capital expenditure in recent and particularly future years may be attributed in large part to investment projects by manufacturers in terms of the Automotive Production and Development Programme (APDP).

Of the R7.9 billion, the bulk (R7.2 billion) will be spent on product/local content/export investment/production facilities, with the balance going on land and buildings and support infrastructure such as IT.

Naamsa says the outlook for the sector for the balance of 2014 will “prove challenging”.

However, it adds, it has “improved modestly,” following record new sales in September.

“A domestic environment characterised by relatively low economic growth, rising interest rates and above-inflation new price increases will hold back growth.”

Naamsa says that 2014 3rd Quarter aggregate industry new car sales came in at 147 885 units which was “a marginal increase” of 179 units or 0.1% sold during the corresponding period of 2013.

Naamsa says the exports to Australasia, Europe and “increasingly” South America “showed strong improvement”.

Exports to other regions recorded “fairly substantial declines compared to the first nine months of 2013.

“With the production of the Mercedes C Class reverting to higher levels with effect from July 2014, industry export sales for the balance of 2014 should show further increases”. - MetroMinutes.


Photo courtesy of www.enca.com