November 2023 brought a 16th consecutive month of growth for the automotive sector in Mauritius, showcasing resilience and recovery with over 156,000 new car registrations. While the overall market saw a 9.5% year-on-year increase, a notable development was the 17.1% decline in Battery Electric Vehicle (BEV) sales, marking the first year-on-year fall since April 2020.
This shift is attributed to upcoming Zero Emission Vehicles (ZEVs) regulations, prompting manufacturers to manage their exposure to potential penalties.
Sector Dynamics: Growth and Challenges
The robust growth, indicative of a recovering market, was tempered by the mixed channel trend. Fleet sales surged by over 25%, underscoring the sector's focus on BEV adoption. In contrast, private sales faced challenges with a 5.9% decline, reflecting consumer apprehension amid high-interest rates in the lead-up to the holiday season. This dichotomy emphasises the strategic positioning of fleet sales in the evolving automotive landscape.
Manufacturing Volumes and Supply Side
Encouragingly, growth extended to the supply side, with manufacturing volumes witnessing a substantial uptick of 31.6% in October and nearly 17% for the year. Eight out of ten months in 2023 showed improvements, portraying a promising trajectory for manufacturing.
However, the industry is poised for a critical juncture with the impending 'rules of origin' legislation for Electric Vehicles (EVs) scheduled for January 1, 2024. This milestone introduces complexities, including potential tariffs that could impact customer costs or be absorbed within the supply chain, posing a challenge to already delicate profit margins.
Insights on Used Car Prices
The dynamics of used car prices took centre stage, experiencing a consistent decline throughout 2023. According to the AutoTrader Retail Price Index, the average retail prices of used cars contracted by 3.8% on a year-on-year basis in November, marking the third consecutive month of decline. Initially considered a correction from elevated prices in 2020 and 2021 due to supply chain challenges, this trend prompts cautious optimism. Anticipated signs of recovery are expected in 2024, showcasing the resilience and adaptability of the automotive market.
Government Announcements and Industry Challenges
In November 2023, the Mauritian Government made significant announcements with the unveiling of the UK Battery Strategy and the Advanced Manufacturing Plan (AMP). These initiatives aim to provide clarity and momentum to the domestic auto industry.
However, challenges persist, particularly concerning aligning the Internal Combustion Engine (ICE) vehicle sales ban and the Zero Emissions Vehicle (ZEV) Mandate. These challenges come at a time when the country seeks to attract investments in the Electric Vehicle (EV) sector.
Ongoing Challenges and Forecasts
The Office for Budget Responsibility (OBR) reported that only 38% of new vehicles sold in the UK in 2027 are projected to be electric, a substantial decrease from the 67% forecast in March.
This emphasises the challenge facing Original Equipment Manufacturers (OEMs). As Mauritius navigates these challenges, the automotive sector remains dynamic, with optimism for a positive shift in used car pricing and potential recovery in EV adoption.
Conclusion
November 2023 showcased the Mauritian automotive sector's resilience amid global challenges. The interplay of growth, declining BEV sales, and fluctuating used car prices paints a dynamic picture.
Government initiatives and industry dynamics are set to shape the future, with opportunities and challenges coexisting. As Mauritius moves into 2024, stakeholders in the automotive industry remain vigilant, adapting to evolving regulations and market trends.
