The automotive industry was hard hit by unrest, lockdown level 4 restrictions and a cyberattack on Transnet.
- Recent unrest in KwaZulu-Natal and Gauteng as well as the cyberattack on Transnet have negatively impacted vehicle imports and exports, data from naamsa show.
- Physical damages to assets and property, lost sales orders and cancellation of new developments in the automotive industry are estimated at over R3 billion, said naamsa CEO Mikel Mabasa.
- Lockdown level 4 restrictions have also slowed down the momentum of the automotive industry’s recovery.
Recent unrest in KwaZulu-Natal and Gauteng as well as a cyberattack on Transnet has negatively impacted vehicle imports and exports and associated losses to the industry are estimated at over R3 billion.
This according to the National Association of Automobile Manufacturers of South Africa (naamsa), which on Monday released July’s new vehicle sales statistics.
Apart from the unrest, lockdown level 4 restrictions have slowed down the recovery of the automotive industry in recent months.
Year-on-year domestic sales lifted by a mere 1.7%, compared to 20.2% reported in June. This is also lower than the 10.5% consensus from the Bureau for Economic Research. In a note issued ahead of the data release, Investec economist Kamilla Kaplan said that sales would have been affected by some dealers in affected areas having to shut down, as well as customers staying away over safety concerns.
Civil unrest and the force majeure at Transnet caused logistical challenges on the N3 highway and the country’s major ports, naamsa noted. Export sales declined by a third (33.1%). “Vehicle exports and imports as well as vehicle production and the delivery of automotive components could take some time to normalise,” the report read.
“Physical damages to assets and property, lost sales orders as well as the cancellation of new developments in the automotive industry are estimated at well over R3 billion,” said Mikel Mabasa, naamsa CEO.
“The devastating economic impact and unintended consequences of these actions not only caused a setback in the fight against the Covid-19 pandemic but could prolong the economic recovery process and also have a lasting impact on the country’s challenges of dealing with poverty, inequality, and unemployment,” Mabasa said.
With the return of calm to KwaZulu-Natal and Gauteng as well as the country moving to adjusted alert level 3 restrictions and an accelerated rollout of vaccines, Mabasa expects the new vehicle market to recover gradually for the remainder of the year.
The automotive industry contributes 4.9% to GDP and accounts for 18.7% of South Africa’s manufacturing output. It is the country’s fifth largest exporting sector.
Earlier Fin24 reported that the manufacturing sector had also taken a knock due to the riots and lockdown level 4. The Purchasing Managers’ Index (PMI) – which measures economic activity in the manufacturing sector – fell by a record single-month decline of nearly 14 points. The PMI is at its lowest level since May 2020.