The concern about having to pay installments on a car that South Africans can no longer afford comfortably ends for the trade-offs. Minister Ebrahim Patel ‘s pragmatic strategy would lead to dealerships working in 30% of their workforce, up to 60% and eventually restoring 100% of their employees on site by 8 June.
With initial social distance limits determined by floor space, larger distributors will have an initial benefit. The re-establishment of trade in new and used cars would also boost essential economic activity as well as raising the burden of uncertainty faced by many South Africans regarding their monthly budget.
We need to start building – again
While it is critical for South African motoring retail, automotive assembly is even more valuable in the region. It represents 30% of the output in the region.
In the last decade local production has declined. BMW, Ford, Nissan, Isuzu, Mercedes-Benz, Toyota and VW have been the only major investment in the new employment and infrastructure. Some car assembly started again last week, but it is vital to quickly hit 100% power.
South Africa receives important foreign currency for automotive exports. In a time when the Rand is low and the return per vehicle exported is rising in value, this is particularly urgent.
We build the desires of the world
What a reawakening of the world economy could hold is so much uncertainty. It has been accepted that purchasers of all commodities are higher expensive and are looking for greater value.
In the automotive industry it means that purchases will be a phenomenon for several months and vehicle factories in South Africa have an advantage: we create what global customers want. Even in an economically depressed post-lockdown environment, our portfolio of local export vehicles will continue to continue to be in demand.
No particularly specialized or ultra-luxury cars are manufactured in South Africa. That means that any global buy-down trend will have little bearing on us.
While developed markets such as the US and EU are more reinforcing and keeping demand for new vehicles more robust, developing and petroleum-producing countries are most likely to suffer. We are in great position to export as lock-down lift to analyze what South African automotive manufacturing assets build and where they go.
In quantity, the biggest exporter of vehicles in South Africa is VW. Polos for global right-hand driving markets like the UK, Japan and Australia is manufactured by the German company’s Uitenhage factory. It also makes Polos, for Europe, a left-hand move.
All of these target Polo markets are powerful economies with a very compact hatchback, as loyal VW customers are seeking value for their brand.
By Noni Nchwe