Taryn Hill
The South African automotive sector is resilient in the face of global disruptions. This has been noted by the National Automobile Dealers’ Association (Nada). The entire sector has demonstrated an extraordinary ability to overcome setbacks and delays caused by supply chain disruptions and inefficiencies in recent years.
The recent publication of South Africa’s new and used vehicle sales statistics has been praised by Nada chairman, Mark Domisse. Despite the devastating impact of the recent KwaZulu-Natal floods and the continued global shortage of semiconductor chips, these year-on-year figures show an improvement from 2021.
For welded assemblies, tubular products, and auto components, Formex Industries is a leading supplier and manufacturer in South Africa. These components are sold to Tier 1 suppliers and original equipment manufacturers (OEMs), who then distribute them to international automotive brands. The resilience of the South African automotive sector benefits not only domestic but also international production facilities that purchase components from South African manufacturers.
Causes of the disruptions
Significant disruptions are still occurring in both the trading environment and the manufacturing sector. Covid-19, though less of a factor, still contributes to these delays as factories all around the world are sometimes shut down. This has caused a shortage of semiconductors and other essential automotive components.
Component supply from Europe has also been affected by the war between Russia and Ukraine. Transportation delays and a shortage of raw materials, such as Russian palladium, are affecting the manufacturing of certain automotive components in the region. This precious metal is a core material used in catalytic converters.
Natural disasters and ongoing protests have wreaked havoc of their own. KwaZulu-Natal’s car manufacturers and retailers have been negatively impacted by the recent spate of flooding and riots in the province. Major transport routes in South Africa have been impacted by protests over rising fuel prices, which has slowed down the supply chain.
Resilience is a good sign for the future
The local automotive industry is prospering in spite of these various factors. In contrast to the same period in 2021, recent export sales have increased by 16%. This is encouraging because Durban’s seaport and a number of its major roads have been severely disrupted. Hopefully, this resilience bodes well for the local industry and economy’s future.
In South Africa, official dealerships account for about 88% of new vehicle sales, with the rental market accounting for about 9%. These statistics, according to Nada, demonstrate the strength of the South African automotive sector even during challenging times.
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