SOUTH Africa’s automotive industry has expressed concern about the escalating geopolitical tensions due to the Russian invasion of Ukraine.
The National Association of Automobile Manufacturers of SA (Naamsa) yesterday said that the current hostilities posed another potential global supply-chain challenge for the car industry because of Europe’s strategic significance to the global automotive ecosystem.
Naamsa said the confrontation between Russia and Ukraine comes at the time when the global car industry is still reeling from global supply constraints.
The industry is still trying to recover from the devastating impact of Covid-19 disruptions and global shortages of semi-conductors, and many other supply chain-related challenges experienced by the industry since the beginning of 2020.
Naamsa CEO Mikel Mabasa said they don’t need another global economic disruption. “We urgently urge all global leaders to work through the UN structures to find sustainable political solutions to the conflict in the region so that the people of Ukraine can avert human suffering, destruction to property and the demolition of some of their important economic infrastructure needed to sustain progress and development,” Mabasa said.
South Africa’s total vehicle sales for February continued to gain traction, rising 18.4 percent to 44 229 units, a further increase of 6 860 units from February 2021. Export sales, encouragingly, also recorded an increase of 3 590 units, or 12.3 percent, to 32 867 units in February compared to the 29 277 vehicles exported a year ago.
Naamsa said the healthy performance in the new vehicle market reflected an improvement in domestic demand conditions, although year-on-year comparisons remain difficult to interpret because of differing pandemic circumstances during the corresponding period.
It said the growth-positive National Budget passed during the month provided some good news for business and consumers with a cut in corporate income tax, accommodating adjustments in personal income tax brackets and no hike in the fuel or Road Accident Fund levy, for the first time since 1990. But motorists’ relief was short-lived as fuel prices will hit record highs this month with petrol to cost more than R21 a litre for the first time ever.
Naamsa said the ripple effects of Russia’s invasion of Ukraine hold negative consequences for the rand, oil prices, food prices, financial markets, as well as potential earlier and bigger interest rate hikes by the South African Reserve Bank to curb inflation.
It said vehicle production, and consequently, vehicle exports would remain subject to global tensions as well as the ongoing world-wide semiconductor shortage.
BUSINESS REPORT ONLINE