COVID-19 has had a significant impact on the global automotive industry, with plants and showrooms forced to shut for much of the year and consumer confidence as low as it could be. 

South Africa is one nation to have felt its force given that its automotive industry is the largest manufacturing sector in its economy. Yet there were bright spots to be found among the gloom of 2020. South African automotive component exports reached a record R54,5 billion, up from R53,7 billion the year before.

So, why did this category thrive during the pandemic while most other areas of the automotive industry suffered? 

Demand remains strong for catalytic converters

The jump can be primarily attributed to stricter emissions legislation that was introduced in Europe in 2020, driving South African catalytic converter exports to reach a record R25.98 billion. 

The punishment for exceeding the emission threshold is strong, so catalytic converters will likely continue to play a major role in the EU market while electric vehicle (EV) sales remain relatively low. EVs pose a threat to catalyst converter exports in the future, particularly with the 2030 ban on new internal combustion engine (ICE) vehicles, but for now, their demand is mitigating the wider effects of the pandemic. 

New Vehicle Sales Plummet

New vehicle sales fell by a staggering 29,1% in 2020 as work and leisure travel was heavily reduced by lockdowns. 2021 is predicted to be a better year overall, however, with Naamsa expecting sales to grow by 15% due to the return of travel and the vaccine rollout increasing consumer confidence. 

Of course, there is still a great deal of uncertainty in relation to the pandemic and other global issues that could impact the market’s recovery. Traders using platforms such as Tickmill will be keenly monitoring developments to see how the wider South African economy performs in the coming months.

An overall decline in exports

India led the way in terms of vehicle imports into South Africa, with 87,953 units accounting for 43.2% of imported passenger cars and light commercial vehicles. There was a sizeable decline of 115,804 in overall export units, however, totalling a value of R26,8 billion. 

It has been a turbulent period for the auto industry, even if record automotive component exports mitigated some of the damage. Thankfully the outlook for the second half of 2021 is cautiously optimistic as COVID-19-related restrictions are eased in South Africa and beyond.