Euro Zone debt crisis threatens car export growth

It is feared that lower production volumes would result in under-utilisation of existing capacity- and possibly in job losses, especially in the automotive component supply chain, due to the knock-on effects of lower production-on-orders-placed.

In 2010, the EU accounted for almost 33 percent of total vehicle units exported. However, in November 2011, locally built vehicle exports fell by more than 28 percent to 20 480 units from the 28 564 units exported in the corresponding month of the previous year. It appears almost certain that vehicle exports for 2011 will be below the projected volumes forecast by The National Association of Automobile Manufacturers of SA (Naamsa). Nico Vermeulen, Naamsa's executive director, stressed the direction of the global economy remained uncertain. "Prospects of slower growth, in Europe in particular, could translate into reduced demand for South African products," he told IOL.

But Johan van Zyl, the president and chief executive of Toyota Motors South Africa, said that despite the drop in vehicle exports in November, exports should be measured over time before concluding there was a slowdown in international demand. In November, Naamsa projected that vehicle exports this year would grow by almost 27 percent year on year to 356 200 units. The association believed that total vehicle domestic production will increase to a record 640 200 this year from the projected 551 000 units produced in 2010. Vehicle exports for the 11 months to November were at 254 325 units, which is still 17 percent higher than the 217 308 vehicles exported during the corresponding period in 2010.

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