Against the backdrop of this status quo, what is likely to change in the next few years? If government has its way, vehicle production and exports will continue to increase, allowing for ever improving economies of scale.
Despite the talk of economic gloom, and the possible fallout from the European debt crisis, demand for new vehicles remains buoyant. There is still a pent up demand for new vehicles, helped along by low interest rates, and brisk activity in the pre-owned vehicle market.
The National Association of Automobile Manufacturers of SA (NAAMSA) is bullish about the industry’s short-term prospects, suggesting further gains in year-on- year sales during 2012, although it pegs its forecast growth in domestic sales at around 7 percent for the year.
However, when factoring in the
ever-growing export market, local vehicle production is expected to increase by 13 percent during 2012, with a projected total of 610 000 units – exactly halfway to the 1,2 million unit target for 2020 envisaged by the APDP.
For the same reasons, prestige brands are more sought after than mainstream marques, even if means making do with a smaller, less practical car. In Europe, Volkswagen’s Passat, the Mazda 6 and the Ford Mondeo are top sellers, but in SA, buyers would rather opt for a BMW 3-Series, or a Mercedes-Benz C-class. Let us not forget the vast distances that SA motorists cover as a matter of course. Driving from Johannesburg to Durban, for instance, is accepted as easily achievable, and even the 1 500 km or so to Cape Town is regularly despatched in one push.
Add the lack of reliable, safe public transport, and one can understand why the car has become the SA motorist’s castle. Even Europeans are amazed by the number of luxury cars on our roads, despite our emerging market status, while exclusive brands like Aston Martin and Porsche sell far more cars in SA than in many more mature, and potentially more lucrative, markets.
34 Management Today | April 2012
Of course, both local and global conditions may upset the forecast applecart. Should fears about a conflict in the Middle East continue to escalate, dragging the crude oil price with it, the cost of motoring will increase, while it may also strengthen the dollar and weaken the rand.
Inflationary pressures, a lower than expected growth rate, volatility of the global financial markets and any lack of confidence in local fiscal policy could also impact negatively on both production and sales of new vehicles in SA, and exports to other markets.
One thing is for sure, though: SA motorists are not about to lose their passion for cars, nor their dependence on their vehicles, in a hurry. And that alone will continue to provide the underlying momentum for an uniquely competitive and sophisticated new vehicle market.
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