Exclusive: South Africa’s auto industry could cut up to 10% of workforce due to lockdown – survey

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(C) Reuters. FILE PHOTO: A worker walks near a row of cars at Nissan’s manufacturing plant in Rosslyn

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By Emma Rumney

JOHANNESBURG (Reuters) – South Africa’s auto industry might have to lay off up to 10% of its workforce because of a three-week lockdown, according to an industry-wide survey provided to Reuters by the National Association of Automobile Manufacturers of South Africa (NAAMSA).

The survey, dated April 8, estimates the 21-day national lockdown could lead to job losses of between 1% and 10%, which could rise to between 21% and 30% if it is extended until the end of May. (https://reut.rs/2wrrFnL)

It was on Wednesday submitted to the government, which issued the same questionnaire to a range of industries to gauge the impact of the lockdown or any extension as it grapples with close to 1,900 coronavirus cases and a shrinking economy.

Almost one-third of the country is already unemployed.

The government considers the automotive industry its most important manufacturing sector and that it is central to reviving South Africa’s flagging economy via industrialisation.

Companies range from the local units of global automakers, such as Nissan (T:7201) and Ford (N:F), and component manufacturers to tiny panel beaters and informal workers.

Neither Nissan, Ford nor South Africa’s Department of Trade and Industry had an immediate comment.

The survey, compiled by NAAMSA Chief Executive Mike Mabasa, covers the entire automotive industry which, it said, employs 468,000 people.

The vast majority of those jobs are in the retail sector. Manufacturing accounts for around 110,000 of the jobs, the survey said.

It also estimated that only 51% to 60% of the industry’s payroll will be paid at the end of April, and between 11% and 20% of small or medium-sized businesses could close.

Estimated potential SME closures rose to between 21% and 30% in a lockdown ending May 8 or at the end of May, according to the survey, which only provides a rough estimate of the aggregate impact on the industry as a whole.

“It is anticipated that new vehicle sales will decline by more than 50% in April 2020 under the current 21-day lockdown,” a response to one question in the survey stated.

Should the lockdown period be extended, new vehicle sales and exports could both decline by more than 80%, with the industry’s major export markets also shut down and the movement of people and goods restricted, it said.