Original equipment manufacturers (OEMs) and vehicle producers in South Africa are expected to focus on the export market going into 2019. New vehicle sales dipped slightly at the end of 2018 across the country, according to data published by the National Association of Automobile Manufacturers of South Africa (NAAMSA).
This drop in local demand for new vehicles could continue in early 2019, forcing vehicle manufacturers to shift their supply strategies and set their sights on the export market. Vehicle exports have increased by 2.5% as compared to the end of 2017. However, international politics and the impending Brexit deal do affect the export market.
South African vehicle manufacturers help sales
South African vehicle manufacturers play a large role in supporting sales through incentives and by keeping automobile price inflation low. Incentives such as scrapping deposits, increasing the mileage warranties and offering free services for the first few years have always benefitted the consumers.
NAAMSA’s recent report reveals that 78.4% of local vehicle sales are from dealerships. Just over 16% were sales to the car rental industry, 3.5% were government sales and 1.8% were sales of corporate fleets. South Africa has a high volume of pre-owned sales due to affordability – a trend that will continue this year.
Commercial vehicle sales on the rise
The report showed that commercial vehicle sales are performing well. The sale of medium-sized commercial vehicles has risen by 17.5% and extra-heavy commercial vehicles by 31%. This robust market segment is due to the replacement of ageing vehicles and fleets in the logistics and transport industries.
Investors in the vehicle industry are likely to be waiting for a few key decisions, such as the 2019 general elections and the announcement of the new budget policy. These events will be accompanied by new policy directions that will dictate corporate investment decisions, and whether exporting will be the path to take.
Formex Industries is a metal forming and assembly company that supplies a variety of complex products to the local automotive industry and export market. The company is based in the Nelson Mandela Bay metropole, South Africa’s foremost region for automotive manufacturing and export.
Formex specialises in producing components for the catalytic converter industry, as well as metal components and assemblies for the various vehicles. Formex aims to become one of the foremost suppliers for the South African automotive industry by 2035, aligning itself with the South African Automotive Masterplan (SAAM) which takes effect in 2020.
Formex is a Level 2 B-BBEE supplier with over 80% black ownership, of which more than 40% are black women. The company is owned by Deneb Investments Limited – a subsidiary of Hosken Consolidated Investments Limited (HCI) – one of South Africa’s biggest true B-BBEE companies listed on the Johannesburg Stock Exchange (JSE).