Slumping automotive sector only to recover in 2018 - KPMG


Audit firm KPMG has warned that South Africa’s automotive industry could face a tough time over the next two years, due to the declining value of the Rand, rising political unrest and fluctuating petrol price.

According to extracts from the firm’s annual Global Automotive Executive Survey hosted in Port Elizabeth this past week, projections for 2016 show a decline of between five and 12 percent compared to the overall decrease of 4.1% last year (617 927 units).

The survey, based on the reactions of 800 auto executives and 2 100 consumers globally, also revealed that while international markets have steadily recovered after the 2008 / 2009 global recession, South Africa’s struggling economy has continued to hamstrung consumers, with rising living costs having a significant impact on disposable income.

“A lack of this won’t be sorted by just politics. Ratings agencies want to see action and not rely solely on words,” KPMG’s Gavin Maile said.

He also remarked that the improvements in the global economy were the main driving force behind the local production sector remaining afloat, as exports from South Africa increased by 20% to 333 748 units during 2015.

“If our manufacturer incentives programme currently in place was not there, we would have had to import every single vehicle sold. Last year, 54% of all the vehicles produced in South Africa were exported, which to a large extent, also helped to offset the cost of imported vehicles,” he said.

“We have a great variety of vehicles to choose from, but we are a small country that accounts for less than one percent of the global automotive market”.

Maile reiterated that the automotive sector continues to play in huge roll in the supporting the country’s economy, and that a repeat of the wage disputes strikes by workers in 2013, could have a disastrous impact given the slow economic growth.

“A lot of the time we follow global trends but more often than not, we tend to create our own successes. We are very resilient country and we will survive. We might be experiencing a dip currently, but we will come out of it stronger,” he said.