Engineering News Online Audio Articles

South Africa’s oil refining capacity has always been rather small when considered on a global scale, but there was some sense of national pride and of security in knowing that the country could deliver – even if most of the crude input had to be imported.

While local refineries were never able to fulfil South Africa’s demand for fuel in recent times – at 25-billion litres a year – local refining capacity helped to supplement imported supplies.

However, it would seem that the country is heading inexorably towards becoming almost entirely dependent on imports, as the local crude refinery industry seems to be drying up.

Industry body the South African Petroleum Industry Association (Sapia) executive director Avhapfani Tshifularo explains that South Africa currently meets about 60% of its fuel demand through imports – a figure which many experts believe will continue to rise.

Over the past few years, the country’s refining capacity has steadily been dwindling as the ageing local refineries have stopped operations one after the other on the back of significant global and domestic shifts in policy, supply constraints, rising production costs and the increasingly unfavourable economics of fossil fuel dependence in a world headed for greener energy pastures.

The latest blow to the local refining industry was the mothballing of South Africa’s largest refinery at the end of March. Shell and BP South African Petroleum Refineries (Sapref), in KwaZulu-Natal, had a peak capacity of about 180000 bbl/d, or a contribution of 35% to the country’s crude refining capacity, which amounts to about 25% of South Africa’s total liquid fuels production capacity.

The decision to indefinitely pause operations and freeze spending at Sapref, made by co-owners BP Southern Africa and Shell Downstream South Africa, was taken to allow for an informed finalisation on the various options available – a sale option being the most preferred.

Although BP Southern Africa CEO Taelo Mojapelo said in February that contingencies had been put in place to ensurethe shutdown of the refinery did not impact on customer-facing businesses in South Africa or fuel supply obligations, politicians, analysts and industry players have been left wondering about the way forward.

Since Sapref’s halt was announced on February 10, talk of the State possibly acquiring the operation has been circulating, with KwaZulu-Natal Premier Sihle Zikalala and Mineral Resources and Energy Minister Gwede Mantashe both going on record with sentiments in favour of nationalising the refinery, most likely through the State-owned Central Energy Fund (CEF).

CEF corporate affairs manager Jacky Mashapu all but confirmed that talks were under way by telling Engineering News & Mining Weekly that the CEF was not able to comment owing to a nondisclosure agreement being in place.

Moreover, various news outlets reported that a CEF delegation was seen visiting the refinery in early March.

However, energy association the South African National Energy Association director Dave Wright does not believe that buying the aged refinery is necessarily the best option, which will cost taxpayers more than it is worth to keep operating and could leave the country with a stranded asset in about 10 to 15 years.

“Government is fixated with the idea that security of supply is linked to processing crude oil. That may have been the case several decades ago, but not anymore,” he tells Engineering News & Mining Weekly, noting that more than enough refining capacity exists globally to make up for the shortfall that would arise from local refineries’ closing.

Global refinery capacity in 2020 amounted to about 101.2-million barrels a day, while actual global refinery throughput was about 76-million barrels a day, thus leaving spare capacity of about 25-million barrels a day. This figure will likely increase as the developed world continues to move away from liquid fuels as part of the electric vehicle revolution, consequently reducing d...

Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about the start of Bid Window 6 of the Renewable Energy Independent Power Producer Procurement Programme; the reconfirmation of the deadline for Bid Window 5 and the announcement of a new deadline for the Risk Mitigation Independent Power Producer Procurement Programme; and the supply chain and pricing challenges that may impact on the deployment of new renewables capacity in the months ahead.

South Africa’s oil refining capacity has always been rather small when considered on a global scale, but there was some sense of national pride and of security in knowing that the country could deliver – even if most of the crude input had to be imported.

While local refineries were never able to fulfil South Africa’s demand for fuel in recent times – at 25-billion litres a year – local refining capacity helped to supplement imported supplies.

However, it would seem that the country is heading inexorably towards becoming almost entirely dependent on imports, as the local crude refinery industry seems to be drying up.

Industry body the South African Petroleum Industry Association (Sapia) executive director Avhapfani Tshifularo explains that South Africa currently meets about 60% of its fuel demand through imports – a figure which many experts believe will continue to rise.

Over the past few years, the country’s refining capacity has steadily been dwindling as the ageing local refineries have stopped operations one after the other on the back of significant global and domestic shifts in policy, supply constraints, rising production costs and the increasingly unfavourable economics of fossil fuel dependence in a world headed for greener energy pastures.

The latest blow to the local refining industry was the mothballing of South Africa’s largest refinery at the end of March. Shell and BP South African Petroleum Refineries (Sapref), in KwaZulu-Natal, had a peak capacity of about 180000 bbl/d, or a contribution of 35% to the country’s crude refining capacity, which amounts to about 25% of South Africa’s total liquid fuels production capacity.

The decision to indefinitely pause operations and freeze spending at Sapref, made by co-owners BP Southern Africa and Shell Downstream South Africa, was taken to allow for an informed finalisation on the various options available – a sale option being the most preferred.

Although BP Southern Africa CEO Taelo Mojapelo said in February that contingencies had been put in place to ensurethe shutdown of the refinery did not impact on customer-facing businesses in South Africa or fuel supply obligations, politicians, analysts and industry players have been left wondering about the way forward.

Since Sapref’s halt was announced on February 10, talk of the State possibly acquiring the operation has been circulating, with KwaZulu-Natal Premier Sihle Zikalala and Mineral Resources and Energy Minister Gwede Mantashe both going on record with sentiments in favour of nationalising the refinery, most likely through the State-owned Central Energy Fund (CEF).

CEF corporate affairs manager Jacky Mashapu all but confirmed that talks were under way by telling Engineering News & Mining Weekly that the CEF was not able to comment owing to a nondisclosure agreement being in place.

Moreover, various news outlets reported that a CEF delegation was seen visiting the refinery in early March.

However, energy association the South African National Energy Association director Dave Wright does not believe that buying the aged refinery is necessarily the best option, which will cost taxpayers more than it is worth to keep operating and could leave the country with a stranded asset in about 10 to 15 years.

“Government is fixated with the idea that security of supply is linked to processing crude oil. That may have been the case several decades ago, but not anymore,” he tells Engineering News & Mining Weekly, noting that more than enough refining capacity exists globally to make up for the shortfall that would arise from local refineries’ closing.

Global refinery capacity in 2020 amounted to about 101.2-million barrels a day, while actual global refinery throughput was about 76-million barrels a day, thus leaving spare capacity of about 25-million barrels a day. This figure will likely increase as the developed world continues to move away from liquid fuels as part of the electric vehicle revolution, consequently reducing d...

President Cyril Ramaphosa has acknowledged the risks associated with South Africa’s transition from coal to renewables but insists the “risks of not undertaking an ambitious and just transition are far greater.”

Speaking during the virtual launch of the Oxford ‘Handbook on the South African Economy’, the President said the commitments made by South Africa to avert a climate crisis carry “significant risks”.

“These include risks to our energy security, scale of industrialisation, levels of employment and economic activity in coal-dependent communities.

“However, the risks of not undertaking an ambitious and just transition are far greater,” Ramaphosa warned.

One of the emerging risks related to the Carbon Border Adjustment Mechanism (CBAM) that South Africa’s key trading partner, the European Union (EU), aims to implement from January 2023, with a transitional period to either 2025 or 2026.

A recent analysis by Trade and Industrial Policy Strategies on the imposition, under CBAM, of a tax on embedded greenhouse-gas emissions on carbon-intensive imports into the EU, shows that the risk to the South African iron, steel and aluminium industries is particularly high.

Meanwhile, Ramaphosa said various institutional mechanisms and policies have been created to steer the country’s just transition, including the Presidential Climate Commission, which had “provided helpful advice that saw us raise our climate ambition at COP26”.

Ahead of the Glasgow conference, South Africa revised its Nationally Determined Contribution to include a new 2030 emissions range of 420- to 350-million tons of carbon dioxide equivalent (Mt CO2-eq), representing a marked improvement on its 2015 pledge of 614 Mt CO2-eq to 398 Mt CO2-eq.

The move proved pivotal in facilitating a ‘Just Energy Transition Partnership’ with the EU, the US, the UK, Germany and France that will see $8.5-billion of grant and concessional loan financing being offered to support South Africa invest in reducing emissions.

“This work, coordinated by former Reserve Bank deputy governor Daniel Mminele, takes us some way towards holding rich countries to their obligations under international treaties to contribute towards decarbonisation of developing countries,” Ramaphosa said.

He spoke on the same day that the Department of Mineral Resources and Energy (DMRE) issued a request for proposals for 2 600 MW of new wind and solar photovoltaic capacity under bid window six (BW6) of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

RENEWABLES SQUEEZE?

The DMRE also reiterated that the deadline for financial close for the 25 BW5 projects selected in October remained the end of April, despite concerns that some of the projects will struggle to meet that deadline, owing partly to the rise in the prices and a supply squeeze on several renewables components.

The department has already delayed, on three separate occasions, financial close for the more controversial Risk Mitigation Independent Power Producer Procurement Programme for 2 000 MW of new capacity.

A signing ceremony was expected to take place in Pretoria on March 31 but was postponed “due to outstanding matters and conditions to be addressed in respect of the power purchase agreements with Eskom, and the need to provide the preferred bidders and their lenders adequate time to undertake due diligence reviews of the project agreements”.

The Independent Power Producer Office did not respond immediately to questions on whether any of the REIPPPP BW5 projects were facing difficulties in meeting the end of April deadline.

The Department of Mineral Resources and Energy has officially launched the sixth bid window (BW6) of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) with the release of bid documentation on April 6.

As has become the norm, prospective bidders are required to pay a R25 000 nonrefundable fee for each prospective project and complete a registration form before receiving the request for proposals (RFP) documentation.

The RFP advertisement does not indicate how much renewables capacity has been allocated to the latest auction, but it is anticipated that at least 1 600 MW of onshore wind and 1 000 MW of solar photovoltaic (PV) will be procured in line with the yearly allocations outlined in the Integrated Resource Plan and catered for by a subsequent Ministerial determination.

The South African Wind Energy Association (SAWEA), which welcomed the launch of a sixth bidding round, indicated that 2 600 MW would be procured, including 1 600 MW of wind.

SAWEA CEO Niveshen Govender described the new procurement round as another step towards addressing energy security and to supporting the local manufacture of renewables components.

“The announcement to open BW6, calling for proposals from IPPs, adds vitally needed power capacity to the country, which continues to struggle with strangled energy supply that is preventing the necessary economic recovery that South Africa so badly needs.

"This also adds impetus to the sector’s push for industrialisation, which relies on rolling procurement in order for the industry to attract the necessary market investment and reduce risk,” Govender said in a statement.

The DMRE advert states that a bidders’ conference will be held prior to the closing date for bid submissions of 17:00 on August 11.

The Independent Power Producer Office (IPP Office), which oversees the procurement on behalf of government, has also confirmed that financial close for the wind and solar projects being procured under BW5 is still scheduled for the end of April.

It reports that the Eskom board has approved the conclusion of power purchase agreements (PPAs) for the projects.

In October, Mineral Resources and Energy Minister Gwede Mantashe announced that 25 preferred bids had been selected, representing nearly 2 600 MW of wind and solar PV capacity.

The projects have a combined investment value of about R50-billion and the weighted average price across both wind and solar PV projects came in at an impressive 47.3c/kWh, the lowest yet to be achieved in South Africa.

The IPP Office also announced that the signing date for the much-delayed Risk Mitigation Independent Power Producer Procurement Programme projects had been rescheduled to the end of April.

A signing ceremony was expected to take place in Pretoria on March 31 but was postponed “due to outstanding matters and conditions to be addressed in respect of the PPAs with Eskom, and the need to provide the preferred bidders and their lenders adequate time to undertake due diligence reviews of the project agreements”.

Financial close on the so-called emergency procurement round has been postponed three times, with the initial deadline having been set for the end of July 2021

Scaw Metals CEO Doron Barnes has attributed the company’s recent decision to invest R2-billion in a new hot-strip steel mill, in Gauteng, directly to the steel master plan, which he insists has the potential to revive both upstream and downstream industries.

The mill, which will incorporate state-of-the-art technology from Danieli, of Italy, will produce 300 000 t/y of thin gauge hot-rolled coil and introduce a domestic flat steel alternative to ArcelorMittal South Africa (AMSA).

Barnes reports that the project is fully funded, with Scaw Metals financing 25% of the project from internal cash resources, with the 75% balance funded using a club loan jointly arranged by Absa and Investec. The two banks, along with the State-owned Industrial Development Corporation (IDC), will contribute equally to the loan.

Civil works on the project have started at Scaw Metal’s Union Junction factory, with commissioning scheduled for December 2023.

In an interview with Engineering News Barnes, who heads the Barnes Group of Companies that acquired some Scaw businesses from the IDC in 2018, acknowledges ongoing criticism of and frustration with the master plan.

However, he believes most of these are based on a misunderstanding of the role of the plan, which he says cannot guarantee immediate progress, for instance, on ensuring that public infrastructure projects proceed – projects that are viewed as key to stimulating demand for steel products.

Instead, he views it as a “platform” through which industry, labour and government can agree on joint actions to address long-standing constraints, or to pursue specific initiatives designed to benefit the industry as a whole.

Barnes acknowledges that each business representative approaches the platform with a corporate agenda but says the workstreams have been set up to support initiatives that have broad-based rather than company-specific benefits and that are aligned with government policy.

Workstreams have been set up to address various sector-wide issues, including:

supply-side issues, such as those related to the pricing and availability of ferrous scrap;

exports, with a particular focus on the opportunities that could arise for South African steel products as a result of trade liberalisation in Africa;

resource mobilisation for enforcement of trade rules and local-content designations, as well as to secure incentives for industry projects;

transformation and human resource development; and

demand-side interventions, such as import replacement opportunities and the promotion of buy-local campaigns.

Workstream progress has been patchy since the signing of the master plan in 2021 at Hall Longmore’s factory in Wadeville, which is another Barnes Group company. Nevertheless, Barnes says Scaw’s investment has been made possible partly by the progress made under the aegis of the master plan to limit scrap exports and to implement a 20% export duty on scrap.

“This has enabled the project funders to get comfort that sufficient quantities and correct qualities of ferrous scrap will be available for the plant to produce efficiently,” he tells Engineering News.

While the preferential price system and export tax on scrap remain controversial among some parts of the industry, Barnes argues that it has been instrumental in ensuring that some long steel products, such as wire rod and rebar, are as competitively priced in South Africa today as they are in China.

This competitive position has been enhanced, he acknowledges, by China’s decision to do away with its 13% export rebate.

The investment decision has also been underpinned by changes in the global steel industry that have underlined the value of domestic production. These include the supply and pricing disruptions associated with both Covid and, more recently, Russia’s invasion of Ukraine, and rising freight logistics costs.

Barnes is optimistic that Scaw’s entry into the primary flat steel market in the coming few years could help ensure a similarly competi...

The Gauteng provincial government (GPG) has tabled a strategy aimed at boosting the collection of current revenue sources and enhancing the potential for new sources, without impacting negatively on service delivery and taking into consideration the impact of the Covid-19 lockdown regulations over the past two years.

The ‘GPG Own Revenue Enhancement Strategy’, aims to unlock the funds needed for the seven provincial priorities, including health, education and facilitating economic growth and job creation in a challenging economic and fiscal environment, outlined in the ‘Growing Gauteng Together’ roadmap.

Gauteng Finance and eGovernment MEC Nomantu Nkomo-Ralehoko, during a post-2022 Budget Breakfast held in Pretoria on Tuesday, said that the revenue strategy is anchored around the two pillars, namely the optimisation of current revenue streams and exploration of new sources of revenue to augment Gauteng’s revenue baseline.

The strategy also aims to modernise in an effort to increase efficiency, cost-effectiveness and client satisfaction, as well as eliminate loopholes in collection mechanisms.

It comprises 16 identified revenue-generating projects, with pillar one maximising current revenue sources such as motor vehicle license fees, casino and horse racing fees, patient fees and interest on the short term investment of surplus funds, while pillar two, in addition to new sources of revenue, will focus on closing loopholes and modernisation to ensure maximum revenue collection.

New revenue initiatives were identified based on an assessment of the potential to increase revenue through these sources without impacting negatively on service delivery and include the establishment of new vehicle impound lots, the licensing fees of private health facilities, road-side advertising and billboards on government-owned facilities, besides others.

“Information and communication technology-enabled public service delivery offers an opportunity to improve efficiency and access to public services and develops the transparency and accountability of governments,” she said, noting that, through the use of technology to improve the efficiency of revenue collection, GPG will introduce the automation of gambling operations; cashless solutions at nature reserves; the online renewal of motor vehicle licences; automated visitor parking solutions at health facilities; liquor licence automation; and an incentive promotion of motor vehicle licence holders.

Other new revenue potential projects identified in the Revenue Strategy include the Gauteng Broadband Network commercialisation, whereby revenue could be generated through third-party offtake for spare capacity generated through Gauteng broadband infrastructure, and e-waste, with revenue expected from repurposing, recycling and licensing of old or scrap electronic material to extract value.

Through the Revenue Enhancement Strategy, GPG’s overall aim is to increase the revenue generated from the province over the next three years by R3.7-billion over and above the 2022 Medium-Term Expenditure Framework revenue baseline estimates.

The City of Cape Town will launch its Land Release Programme for More Affordable Housing at its first Affordable Housing Indaba set to take place later this week.

The city says the programme has been informed by its assessment of suitable city-owned land, including land in and near the Cape Town central business district and other urban centres in the metro, to determine whether some of these properties could be developed for affordable housing opportunities.

The Indaba seeks to bring together affordable housing partners, other government stakeholders, financiers and private developers to unlock opportunities on well-located land that will be released by the city.

“The outcomes of the Indaba will inform the city’s accelerated Affordable Housing Programme,” says Cape Town mayor Geordin Hill-Lewis.

“We hope to learn from the private sector and other stakeholders, especially about what they require for sustainable private and public partnerships that can accelerate affordable housing provision and propel Cape Town into a spatially inclusive metro with greater access to affordable housing.”

Hill-Lewis says the city will also show the private sector what it has available in terms of city incentives and other services on offer to help enable development.

“The Land Release Programme provides some of the building blocks of the new city of hope we are building together,” he notes.

“The city’s land release for housing is, however, not sufficient on its own.

“We continue to call on national government to release its large pieces of suitable land to the city for the development of affordable housing.

“National government sits on the largest well-located mega-properties in Cape Town for housing, with a yield of potentially over 100 000 units.

“These properties include Wingfield and the completely under-utilised sprawling parliamentary village of Acacia Park, where a few MPs occasionally reside. We will continue to work on unlocking that land,” says Hill-Lewis.

He adds that the City of Cape Town currently has more than 6 500 social housing units in the overall pipeline across 50 land parcels city-wide, including 2 000 social housing units in the central Cape Town area.

Apart from the social housing units in the pipeline, there are also 2 500 opportunities nearing completion, or projects that are about to begin construction along the Voortrekker Road corridor and other economic nodes.

Current central Cape Town social housing projects include packaging the Fruit and Veg site (around 150 social housing units) and the first precinct in Parow (around 350 units) for release to the market within the current year.

In Maitland (around 200 units) is under construction.

Projects nearing construction phase include Pine Road (around 240 units) and Dillon Road (around 150 units) in Woodstock, as well as Salt River Market (around 200 units).

Projects undergoing land-use management processes to be made available for social housing include New Market (around 200 units), Pickwick (around 600 units), and Woodstock Hospital precinct (around 700 units).

Western Cape government-driven projects, supported by the city, include the Conradie Park development in the inner city feeder suburb of Pinelands, Founders Garden, and Helen Bowden Nurses Home in Green Point.

All these projects have significant potential for social housing unit yields, says the city.

500 000 Housing Opportunities Needed

“Between 1996 and 2016, Cape Town’s population increased by 56% to more than 4.3-million residents, and over the same period, there was a 94% increase in the number of households, to around 1.36-million,” says Human Settlements MMC Malusi Booi.

“To accommodate projected growth, as well as to manage the existing housing demand, it is estimated that roughly 500 000 housing opportunities need to be created between now and 2028.

“Urbanisation will continue and the associated growth in informality.

“This is not a problem that is unique to Cape Town. The city developed its Human Se...

The poor state of roads in South Africa is adding to the many challenges faced by farmers and industry organisation Agri SA says deteriorating roads are costing the agricultural industry billions of rands every year.

It also threatens the food security of communities and the country.

The industry body has, therefore, launched a national campaign to raise awareness about the state of roads, after a survey highlighted the enormous losses farmers are incurring as a result of poor road maintenance.

Farmers who participated in the survey rely on road transportation to move about 94% of their produce. This equates to an average R23-million worth of agricultural products transported by road per participant, for a combined yearly total of R7.1-billion.

About 13% of respondents rely on road transportation on a weekly basis, while more than 87% of them rely on roads daily. Nearly 70% of respondents to the survey have attempted to fix affected roads themselves at some point.

The respondents, on average, incur repair and other related costs of more than R200 000 per participant per year, "which is certainly untenable for small-scale farmers, and unnecessary for large-scale farmers," AgriSA notes.

All but two of the survey’s 311 agricultural enterprise respondents have experienced operational challenges because of the state of roads in their area, with an estimated average of 16% in turnover losses experienced during the last financial year.

The worst-impacted sectors are animal production, agronomy and horticulture.

The costs incurred range from engine and trailer damage to shorter vehicle lifespan and accidents. The increased transport and maintenance costs ultimately affect the consumer, how much they pay and how fresh they receive the produce.

Agri SA executive director Christo van der Rheede says the agricultural industry's contribution to gross domestic product of about R128-billion could be higher if roads were to be better repaired, maintained and managed.

He says Agri SA stands ready to cooperate with government to improve road infrastructure to ensure farmers have the best chance of success. The industry body will share its roads survey data with the Presidency.

Speaking during a webinar hosted by Agri SA on April 5, Free State Agriculture commercial manager Jack Armour said the Department of Transport has been experiencing systemic issues for years, including a chronically too-small budget to ever catch up with repair backlogs; a top-heavy bureaucratic structure; poor maintenance and management of the centralised Yellow fleet; no oversight, management or quality control done by independent consulting engineers; and overall a heightened focus on political instead of scientific and cost-effective professional approaches to engineering.

Agri Limpopo head Deidre Carter added the country was losing precious tax money, jobs and community support when companies decide to close down operations or move to locations with better infrastructure.

For example, foods manufacturer Tiger Brands closed down its Alldays depot in the province, owing to road deterioration, resulting in a 3 000 t drop in tomato production.

Van der Rheede says the impact of damaged roads is not exclusive to agriculture, and other industries, such as mining, are also suffering immense cost and reputational damages, which will continue if local, provincial and national government does not take action.

Domestic new-vehicle sales in March increased by 16.5%, to 50 607 units, compared with the same month last year.

This is the highest monthly sales number since the pre-pandemic month of October, 2019, says Naamsa | The Automotive Business Council.

“The positive new vehicle market performance . . . could be attributed to pent up demand aligned with the increasing normalising of business conditions, as well as enticing new model choices in the domestic market.”

Of total industry sales, an estimated 85.8% represented dealer sales, with 8.2% of vehicles entering the country’s rental fleets. About 1.4% of new vehicles were sold to industry corporate fleets, with the remaining 4.6% procured by government.

The new-passenger-car market reached 33 790 units in March – a 27% jump on the same month last year.

The sale of new bakkies, vans and taxis did not see the same surge, and decreased by 2.7%, to 13 795 units.

The Nedbank Group Economic Unit says the decline, the first in the sector this year, probably suggests a shift in consumer demand from bakkies to more affordable passenger vehicles.

March medium-truck sales grew by 18.4%, reaching 798 units, while heavy-truck and bus sales jumped by 14.5%, to 2 044 units.

The National Automobile Dealers’ Association says these positive numbers could signal improved business confidence.

New-vehicle exports from South Africa were impacted by the escalation of the Russian-Ukraine war which hampered volumes to Europe, South Africa’s top export region.

This saw exports decline by 12.4% compared with the same month last year, to 34 285 units.

For the first quarter of the year, new-vehicle exports are now 4.1% below the same period in 2021.

Naamsa believes that prospects for the 2022 export market remain positive on the back of new locally manufactured model introductions later this year.

The industry body warns, however, that global sales growth is expected to moderate as the Russia-Ukraine conflict increasingly impacts on demand and supply chains, in particular in Europe.

Vehicle production and exports are also being hampered by the ongoing global semi-conductor shortage, with global trade flows expected to deteriorate further if the conflict in Ukraine continues for a long period of time.

Looking at the domestic market, Naamsa says that escalating inflation risks, ongoing record fuel prices, low and stagnant economic growth and a rising interest rate cycle will all impact the new-vehicle market negatively going forward.

“Upward pressure on food, fuel and electricity prices will adversely impact all households over the short to medium term, and consumers should brace themselves for ongoing cost of living increases.”

To date, first-quarter new-vehicle sales are up by 17.9% compared with the same period a year ago, and are 14% stronger on a quarter-on-quarter basis, notes Nedbank.