Automotive industry investment in SA set to decline
Planned capital investment by South Africa’s automotive industry, which increased in 2019 to its second-highest level on record at R7.2 billion, appears set to decline until there is a global recovery in GDP growth and export markets from the impact of Covid-19.
A new National Association of Automobile Manufacturers of South Africa (Naamsa) confidence index, which anonymously canvassed the opinions of each of the CEOs of the seven automotive original equipment manufacturers (OEMs) in South Africa, revealed that 64.7% of them believe investment expenditure declined in the third quarter of 2020 compared with the same quarter in 2019.
In addition, 47% of the CEOs believe investment expenditure will be lower in the next six months compared with the prior period.
The Naamsa confidence index is contained in the association’s latest quarterly review of business conditions for the new vehicle manufacturing and automotive sector for the third quarter of 2020, which was released on Monday.
Read: SA’s auto industry in a fight for its survival post-pandemic
Naamsa CEO Mike Mabasa said the continued high levels of capital expenditure are due to investment projects by manufacturers in terms of the Automotive Production and Development Programme (APDP), which are normally spread over multiple years, and the higher levels of production for export markets.
But Mabasa said the sentiment expressed by the Naamsa CEOs relating to automotive business conditions over the next six months, by and large, remains pessimistic.
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