Economy & Business News - 18 March 2024

18 Mar 2024

ECONOMY & BUSINESS

• In the 2023 AutoTrader Car Industry Report Toyota took top position as South Africa’s most sold used-car brand with 60 296 units changing hands, while the Ford Ranger reigned supreme as the country's most sold used model, at 20 156 units. The report shows that online car-buying is a phenomenon that continues to gain traction in South Africa. The newest report also shows that the average selling price decreased by 7.6% to R399 163 in 2023, down from R432 407 in 2022, as cash-strapped South African consumers continued to seek out cheaper mobility options. The average mileage on the clock recorded a slight upturn – from 75 939 km in 2022, to 77 783 km in 2023. Search data on AutoTrader is regarded as an indicator of the popularity of a brand and/or model – and Volkswagen, and specifically the Volkswagen Golf, came up trumps in this regard. (Source)

• Chinese carmaker Chery is one of South Africa’s best-selling car brands, and its family of vehicles will soon be getting much larger with the addition of new models pulled from its various sub-brands. According to a representative from Chery South Africa, the company is planning to introduce cars from its Exeed, iCar, Karry, and Luxeed divisions, reported TopAuto. However, these cars will be sold under the existing nameplates of Chery, Jaecoo, and Omoda. (Source / Video)

• Transnet, South Africa’s state logistics company has begun the process of allowing private companies to use its vast rail network by publishing a document detailing how it envisages the process will work. The draft network statement will be gazetted in a few days’ time for public consultation before being finalized in Transnet’s next financial year, which begins 1 April, the company said in a statement. The process of getting private trains onto its tracks will start in the second half of the year, the company said. (Source)

• Manufacturing production, according to the Stats SA, increased by 2,6% in January 2024 compared with January 2023. The largest positive contributions were made by the following divisions: petroleum, chemical products, rubber and plastic products (13,6% and contributing 2,9 percentage points);  wood and wood products, paper, publishing and printing (5,0% and contributing 0,5 of a percentage point); textiles, clothing, leather and footwear (6,6% and contributing 0,2 of a percentage point); and glass and non-metallic mineral products (5,2% and contributing 0,2 of a percentage point). (Source)

• Business confidence in the South African factory sector, according to the latest Absa Manufacturing Survey, declined again in 1Q 2024. Business confidence in the manufacturing sector declined by five index points to 21 in 1Q 2024. The current level is well below the long-term average, and at 21 points, only about two in ten business people in the manufacturing sector are satisfied with prevailing business conditions. With domestic and export demand ticking down in 1Q, insufficient demand was rated as a more serious constraint on business conditions than in 4Q 2023. With both domestic and export demand ticking down in 1Q, it was unsurprising to see insufficient demand being rated as a more serious constraint on business conditions than in 4Q 2023. For a fifth consecutive quarter, respondents noted a decline in fixed investment levels compared to the same level last year. A net 17% reported a decline in 1Q. Worryingly, respondents also turned more downbeat about planned fixed investment in 12 months time. The general political climate is seen as the most serious constraint on the ability to invest in 12 months time. (Source)

• The FNB/BER Building Confidence Index after rising to an eight-year high in 4Q 2023 fell sharply to 27 in 1Q 2024. The decline was broad-based with four of the six sectors recording a fall in sentiment more than 20 points. The current level of the index therefore means that more than 70% of respondents are dissatisfied with prevailing business conditions. (Source)

• Mining production, according to the Stats SA, decreased by 3,3% year-on-year in January 2024. The largest negative contributors were:  manganese ore (-27,1% and contributing -2,3 percentage points); gold (-12,7% and contributing -1,8 percentage points); and diamonds (-41,2% and contributing -1,7 percentage points). Iron ore (9,8% and contributing 1,3 percentage points) was a significant positive contributor. (Source)

• Two-pot retirement system. The Financial Sector Conduct Authority (FSCA) is concerned that the country’s new two-pot retirement system will make many South Africans think they have to access their retirement funds before retiring. This is according to FSCA commissioner Unathi Kamlana, who said this is a very important change affecting members of retirement funds in South Africa. South Africa’s new two-pot retirement system will kick in from 1 September 2024. This reform allows pre-retirement access to a portion of one’s retirement assets. From September 2024, contributions to retirement funds will be split – one-third will go into a “savings pot”, and two-thirds will go into a “retirement pot”. Retirement fund members will be able to withdraw amounts from the savings component before retirement, while the retirement component will remain protected. (Source) 

• SAA privatisation deal of the table. Minister of Public Enterprises, Pravin Gordhan, announced that the more than three-year-long negotiation with the Takatso Consortium to buy a 51% share in state-owned South African Airways has been ended. He said it would not be in the public interest to sell a majority stake in the airline at its Covid-19 pandemic price value of just over R2 billion while its current value stands at over R5 billion. The Takatso Consortium says that the changes in the deal would have taken too long and that the time constraints to meet new directives by the competition authorities would have made it even more difficult to conclude the majority purchase of SAA. (Source) 

• Internet interruption. Many South Africans were disconnected from the internet as multiple breaks in undersea fibre cables connecting the country’s online traffic to the rest of the world resulted in outages for the country. The outage saw disruptions for both mobile and fibre internet access. Fibre network operator Seacom confirmed a break on the West Africa Cable System on the day, saying its services on that cable had been impacted. (Source)