The automotive Industry has become increasingly competitive in the past few years with manufacturers and brands jostling for a leadership position in both international and local markets.
After the DTI introduced the Automotive Production Development Programme (APDP) last year, the National Association of Automobile Manufacturers (NAAM) is hopeful that production, especially that of light motor vehicles, will rise from 2014 onward because of the APDP.
Playing a big role in training and development of skills in the automotive industry, the Automotive Industry Development Centre’s CEO, Barlow Manilal, says the local automotive industry has grown significantly over the last two decades.“At its peak, the country produced around 650 000 vehicles for local and export customers. During the economic downturn and recession a few years back, these numbers decreased significantly, but we are on a growth path once again and should be able to exceed 700 000 units per annum within the next year or two.
“One of its strengths is that it supplies locally assembled vehicles into various parts of Africa. South Africa acts as a hub into the rest of Africa and this is key to building a successful automotive industry. The local automotive industry also creates jobs and assists to reduce unemployment. There are weaknesses in our local supply chains,” Manilal says.
He points out that South Africa is traditionally the leader of the of the automotive industry when compared to the rest of Africa. “South Africa is traditionally the leader of the automotive industry when compared to the rest of Africa. South Africa is one of largest manufacturer of vehicles in the world and represents 80% of Africa's vehicle output, but less than 1% of the world market. We have seven locally based manufacturers who assemble cars for local and export markets.”
Compared to countries like Japan, Germany, the USA and other developed markets, South Africa is a very small automotive market Manilal says. However, we are aiming to become more globally competitive and hopefully create a stable manufacturing economy to boost investment and persuade manufacturers to set up business in this country. Our biggest automotive trade partners at the moment include Brazil, China, India and Thailand.
In terms of how much local manufacturing we are seeing and the need to become more locally based, Manilal says only 30% is locally manufactured and that we are indeed seeing a need to change these numbers and increase our local manufacturing content. In this way, it further creates jobs and makes the industry far more competitive because we don’t have to import these components.
When asked about where the biggest automotive investment opportunities in Africa and South Africa are at the moment, Manilal says, being home to BMW, Nissan/Renault, Tata and now Iveco Trucks, Rosslyn in Gauteng is a key manufacturing base for cars. Other hubs that will be developed in the future to help expand South Africa’s automotive footprint, include Silverton (where Ford’s assembly plant is based), the Eastern Cape and Prospectron. Opportunities also lie in the production of materials (automotive steel and components).
“We are busy promoting the City of Tshwane as the investment destination of choice. We have developed a 50 year plan to transform Tshwane into the largest automotive city in the world. The Eastern Cape is home to three assembly plants: Volkswagen, Mercedes-Benz and General Motors (Opel, Chevrolet and Isuzu). In the near future, it also will be the home of FAW trucks. Toyota’s assembly plant is based in Prospecton, Durban,” he told Achiever.
As to how the general economic climate has affected investor confidence in this sector, and the noticeable consequences resulting from the recent labour unrest, Manilal says labour unrest does hamper and slow down production, and will always have an adverse effect on vehicle production. “Yes, we have seen a decline in vehicle production numbers due to the strikes this year; however, most developing countries experience labour unrest and face similar challenges.”
His predictions for the automotive industry in South Africa? “The DTI has a vision to produce 1.2 million cars by 2020. We are hoping to make this vision a reality. We remain optimistic that we can double our vehicle production numbers by 2020.”
Automotive by numbers
The average industry employment figures rose by 441 jobs in the third quarter of 2013, therefore bringing the total to 30 344 positions within the industry, according to NAAM. New car sales also rose to 125 189 units, more than 6.4% more than in the corresponding quarter in 2012. The local industry’s largest export market remains Europe, despite the effects the recession is having on the Euro zone. In 2012, 66 929 vehicles were sold to Europe, 6 000 more than is sold in Africa. However, the recession resulted in a 12.7% drop to 58 403 vehicles. (Source: SouthAfrica.info)
