SA on target to produce 1.2 million vehicles in 2020

Speaking at a conference organised by the Automotive Industry Development Council (AIDC) as part of the South African Automotive Week 2012 (SAAW), Powels said the industry had enjoyed sustained growth of both local sales and exports since the downturn of 2009. This mirrors the global trend where sales are up in all regions, with the exception of Europe.

A rapid rise of the sector in the East had resulted in a dramatic change of the world order in the auto sector, which has seen the major share of auto manufacturing move from the West to the East. South Africa's share of world production has dropped from 0.8% to 0.66% since its previous high before the global slump. The share is now relatively stable at 6% and is considerably higher than when sanctions ended in 1995.

Contribution to economy

The auto industry remains a significant contributor to the local economy, and accounted for 11.8% of South African exports in 2011. This share is being maintained - a record volume of automotive exports of 361 000 units is expected in 2013 due to the introduction of new models. This is a 30% growth on the predicted volume of 281 000 units in 2012. Vehicle component exports have risen from R3bn in 1995 to R38.8bn in 2011, with a forecast of R45bn in 2013.

"The trend is clear. There is exponential growth based on security from government policy," Powels said. Continued support from government, parastatals and other key stakeholders is, however, required to help the industry double its current production of around 600 000 to 1.2 million over the next eight years.

Costs must be competitive

"It has to be a shared roadmap," he said. Partners include Naamsa, the National Association of Automotive Component and Allied Manufacturers (Naacam), the National Union of Metalworkers of South Africa (Numsa), the Department of Trade and Industry and other key government departments, as well as key state-owned enterprises. The Automotive Production and Development Programme (APDP) in its present form provides some of the support needed.

In addition, the costs of logistics, raw materials, power and labour had to be competitive. Other challenges include the supply of tooling, refinement of the government's preferential procurement and beneficiation policies, and the signing of trade agreements that open up or secure markets.

"The industry is working closely with government and government entities to ensure the development of infrastructure in the form of ports, rail and power. If we keep working together at same level of attention, we can succeed. The consequence is that there should and will be the growth needed to produce 1,2 million vehicles a year by 2020," Powels concluded.