Creamer Media's Engineering News - South African vehicle manufacturers are expected to increase their capital expenditure (capex) to R4,45-billion this year from R3,99-billion in 2010, the National Association of Automobile Manufacturers of South Africa (Naamsa) said on Monday.
The R4,45-billion would be an 80% increase on the R2,47-billion spent in 2009, when vehicle manufacturers deferred projects due to the global financial crisis.
Naamsa attributed the increase in capex during 2010 and 2011 to investment projects to gear up for the Automotive Production and Development Programme, which would replace the current government support programme, the Motor Industry Development Programme, in 2012.
The South African government has identified the automotive industry as an important sector for employment growth.
Trade and Industry Minister Dr Rob Davies said in his recent budget that the Automotive Investment Scheme had resulted in planned investment by automotive assemblers and component supplier companies of between R9-billion and R13-billion by assemblers and an additional R4-billion by component companies.
Such investment would see a significant expansion in local component sourcing by vehicle manufacturers and support 24 000 jobs.
The new vehicle manufacturing industry employed 28 179 during the first quarter of the year, which was about 50 more employees than last year’s first quarter.
The automotive industry had been showing a slow, but constant recovery, and research by Econometrix showed that the sector’s contribution to the country’s gross domestic product growth was up from 5,9% in 2009, to 6,2% in 2010.
New car sales rose by 25,5% to 102 185 units in the first quarter of 2011 compared with the 81 447 units that were sold during the same quarter last year.
Aggregate industry commercial vehicles amounted to 45 533 units, which was a 15,4% increase in sales compared with the 39 449 units sold during the corresponding quarter of 2010.
The association anticipated further domestic and export growth in 2011, as a continued, albeit somewhat slow recovery in the South African and global economy supported positive growth.
New domestic vehicle sales would be further supported by public-sector infrastructure investment.
Naamsa anticipated that domestic new car sales would grow by 15%, while export sales were predicted to rise by about 26% during the year.
However, the association warned that the inflation outlook, among other things, had deteriorated owing to price and taxation increases. This would put upward pressure on interest rates towards the end of 2011 and into 2012. “Further growth in export sales will depend on continued recovery in the global economy,” said Naamsa.
