A mad dash in SA’s auto industry

South Africa is such a strange place. Five partial municipal elections were held on Wednesday, two of which were made necessary because the former public representative was violently killed. There is mass unemployment, load shedding, flooding and the usual setbacks that we talk about every day. And during this last month of May, according to monthly statistics provided by the National Association of Automobile Manufacturers of South Africa, 10 people have bought themselves Lamborghinis.

We don’t know what kind of Lambos they bought, but they cost between R4 million for the SUV called Urus and R7 million for the Aventador which is a…wow, hard to describe…sports car? Calling it a “sports car” is like calling the F-35 Lightning an “airplane”; it is, but it is not. An Aventador is really a statement posing as a fast moving metallic object. And this statement is simple. It’s this: you, your siblings, your friends and family, and the entire planet for that matter, can just f…off.

Why Lamborghinis are popular in South Africa is actually not at all surprising. It’s the national culture: live fast, take what you can, die young and leave a mangled corpse. What is surprising, at least for some of us, is that Lamborghinis are more popular than Ferraris, as only five of them were sold in May. Really, okes, hang in there. But SA has a certain dignity, since only two Bentleys were bought last month.

Do not be too obsessed with the dozen crazy purchases. The real news is what ordinary people have done, and what ordinary people have done is buy Toyotas and Volkswagens by the thousands, as they have been doing for years. In total in May, just under 40,000 vehicles were sold, including around 27,000 passenger cars, meaning that South African industry is now selling the same number of cars as before the Covid crisis, which is a great relief.

Car sales are a fantastic measure of the true state of the economy. They are expensive enough to be meaningful, but not so expensive as to be arbitrary. They are also a measure of SA’s industrial capacity and performance and, in this case, export performance. South Africa’s vehicle export performance fell sharply in May, mainly due to the closure of the Toyota factory following the floods, in this case.

It’s good to see the rebound, but the fact is that SA’s passenger car sales have been flat since 2013, when around 40,000 passenger cars were sold per month. The last few months have seen strong increases, but it is not yet clear whether these are simply compensating for the drop in demand during the Covid period.

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For a small country, South Africa can be proud of its automotive industry. The European Union recently published its 2021 report on the SA/EU Economic Partnership Agreement. Interestingly, for the first time since the signing of the agreement in 2014, South Africa has a trade surplus with the EU.

In the typical nature of free trade agreements, total trade with the EU, both imports and exports, increased sharply over the period on a rand basis, and exports to the EU are now about 50% higher than in 2014. This has happened even as South Africa’s trade with the EU as a percentage of its total exports and imports is more or less static . But overall, the EU remains South Africa’s largest trading partner, with around 22% of total trade, and that balance is now positive.

This is a good thing, because South Africa has a huge trade deficit with China, the big favorite of the political elite. South Africa’s trade with the EU is also good in another way: the proportion of manufactured goods exported from South Africa to Europe is much higher than to the rest of the world. And the reason for this is mainly cars.

South Africa’s motor vehicle trade with the EU is slightly tilted in favor of the EU. Personally, I blame those okes and their Lambos. But for both sides, it’s a big chunk of the trade, about a quarter. The challenge for SA now is to maintain this trade, as the auto industry moves away from internal combustion engine cars. It’s wonderful that we have such far-sighted and focused administrators dealing with this issue – such a relief. (Please turn on your sarcasm monitor at this time.)

The big question, of course, is: where in fact can you drive a Lambo in Johannesburg without sliding into a pothole? DM/BM