News | South African Automotive Week > Motor Industry needs help

Motor Industry needs help

09 Oct 2009

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South Africa’s motor industry needs help to survive – and solutions need to be found within the next two years, says National Association of Automobile Manufacturers of South Africa (Naamsa) president David Powels.
A combination of global over-supply, high costs, low productivity, a lack of certainty over government support and the collapse of the market were all threatening the future of the South African auto industry, he warned.
In order to grow, the industry needed a co-ordinated effort from all role-players, including industry, government, workers, labour unions, component suppliers and parastatals.
For the industry to survive, local content had to increase from less than forty per cent to over 70 per cent.
“There must be a clear acknowledgement of the seriousness of the situation,” he warned.
South Africa had suffered a 47 per cent drop in the local market from the peak of over 600 000 vehicles a year to the present 453 000.
Exports had also dropped by 39 per cent – in part due to the collapse of global markets, but also because of increased capacity and South Africa’s inability to compete.
Powels said it was becoming increasingly difficult for locally based OEMs to justify the continuation of operations in this country when the same vehicles could be imported from places like China or India at a lower overall cost.
“In the global context” the South African market made up less than one per cent of total vehicle sales.
Powels was, however, confident that solutions could be found – and said this was reflected by the continued investments in the motor sector by original equipment manufacturers.
BMW, Toyota and Volkswagen had all made investments totalling billions of rand since the start of the downturn started in 2006.
“We haven’t given up,” he said.

“Silver Bullets” for medium to long-term survival of SA Auto Industry.

Average produced volumes per platform p.a. need to increase to >50 000 p.a. (Ideally 75 000 to 100 000 units p.a.)
Local Content levels need to increase from <40% to >70%.
Supplier Competitiveness has to improve to Index 100 to W. Europe as a minimum within next 2/3 years.
A major “Industrialisation Strategy” is required in the supplier industry. The supply chain needs to increase manufacturing depth (2nd and 3rd Tier suppliers).
APDP as well as IDC to provide support for the “Industrialisation Strategy”.
Productivity to improve dramatically from <20 cars to >30 cars per employee per annum.
Massive investment needed in Training and Skills development at all levels – Operator, Specialist / Engineer, Leadership.

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