Imports spiral upwards in buoyant local market Negative trade balance

ED RICHARDSON Calendar 2006 represented another record year for the South African new vehicle manufacturing industry with both domestic sales and industry production rising to all time highs, according to the National Association of Automobile Manufacturers of South Africa (Naamsa). In short, South Africans bought 714 340 vehicles – up by 15.7%, on the 2005 numbers. But, says Roger Pitot, executive director of the National Association of Automotive Component and Allied Manufacturers (Naacam), sales of imported vehicles grew by 31% in 2006 while locally produced sales improved by about 1%. “Almost all growth in the new car market came from imported cars,” he is quoted as saying by Business Report.
According to Pitot, imports made up 57% of the vehicle market in 2006 against 50% in 2005 and 39% in 2004. “In fact, imports exceeded 60% of the car market in November and December.” He is supported by University of Cape Town researchers Anthony Black and Sipho Bhanisi. “As a result of growing component and vehicle imports, the overall automotive trade deficit widened dramatically from under R5.1 billion in 1992 (a year of weak demand) to R14.1 billion in 1996 before declining as a result of falling domestic vehicle production (requiring fewer imported components) and growing exports,” they say. Booming domestic demand for imported vehicles as well as components to supply the increase in domestic assembly has led to a further rapid increase in automotive imports and a negative automotive trade balance of R18.8 billion in 2004 and R27.7 billion in 2005. Pitot said this trend was likely to continue unless something changed radically.