Vehicle exports from South Africa could exceed domestic sales this year and reach a record in 2024 as high interest rates and lukewarm consumer confidence suppresses local demand.
Total car shipments are projected to increase 8% to 380,900 this year, while domestic sales are only expected to grow 3% to 375,000 vehicles, according to a quarterly review from the automotive business council Naamsa.
Exports and domestic vehicle sales beat projections last year, despite flooding in the eastern KwaZulu-Natal province, a strike at rail operator Transnet that interrupted shipments, and a hike in borrowing costs by the central bank.
More than 70% of the industry’s exports last year went to Europe.
While a weaker exchange rate should support exports this year, domestic sales will face headwinds in an economy that’s projected to grow less than 1% in 2023 and 2024.
The impact of the economic downturn, protracted geopolitical conflict risks and power cuts which affect cost and the ability to do business in South Africa, remain major concerns for 2023, Naamsa said.
However, prospects for vehicle shipment growth remain optimistic on the back of further new model introductions by major exporters in the domestic market, the council said.