QUARTERLY REVIEW OF BUSINESS CONDITIONS: NEW MOTOR VEHICLE MANUFACTURING INDUSTRY / AUTOMOTIVE SECTOR: 2nd QUARTER 2020

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 second quarter of 2020, as submitted to the DirectorGeneral, Department of Trade, Industry and Competition.

Industry vehicle sales, export and import statistics for 2011 through 2019, together with current projections for 2020, are reflected on the attachment to the submission.

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• Overall a quarter of extremities due to the COVID-19 impact but in line with domestic motor industry expectations and global trends in other major vehicle manufacturing countries
• Second quarter 2020 industry employment reflected a decline of 467 jobs to reach 29 529 positions at end June 2020
• Industry capacity utilisation levels in the various segments reflect the impact of the COVID-19 country lockdown restrictions on the automotive industry as well as the ongoing recessionary economic climate in the country during the quarter
• Aggregate capital expenditure by the major vehicle manufacturers in 2019 recorded its second highest level on record at R7,274 billion
• All vehicle segments reflected massive year-on-year declines during the quarter, linked to the temporary closure of the entire motor industry during the quarter due to the COVID-19 country lockdown restrictions as well as in mirroring the current negative economic growth rate in the country as a leading economic indicator
• Aggregate new vehicle sales registered the biggest quarterly decline on record with the second quarter 2020 reflecting a massive fall of 63,4% compared to the second quarter 2019, which exceeds the 34,8% decline experienced in the first quarter 2009 as a result of the global financial crisis by far
• With the easing of COVID-19 lockdown restrictions in South Africa and abroad, expectations are for the domestic new vehicle market and export sales to improve during the second half of the year, but it is anticipated that the new vehicle market could drop back to the levels of 20 years ago