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Long term strategy essential to SA’s automotive industry’s survival
Posted on: Sunday, 16 May 2004. Article source: The Herald
SOUTH Africa’s motor industry will have to develop a long-term strategy within the next five years if it hopes to maintain its position as a global player says Stephen D’Arcy of PricewaterhouseCoopers.
D’Arcy says that global light vehicle production over the next six years will see Asia Pacific countries account for 45 per cent of total world production, with China taking the lion’s share.
Speakers from South Africa and abroad were unanimous that the local auto industry would face a challenge from China, its strongest competitor for future investment.
He explains that “South Africa is a very small player in a very large global market. Automakers need a compelling reason to retain their interests in South Africa and recent growth is guarantee of sustainability”.
D’Arcy predicts a significant rationalisation of assets by the main car makers which could lead to closure of up to 45 assembly plants around the world.
An option open to the South African industry is the move away from its focus on right-hand-drive production, while building on its export programme.
“Since the introduction of MIDP, car makers with export programmes have moved towards assembly of more volume on fewer platforms, but it should be remembered that these volumes are very small in global terms. Toyota Corolla assembly here is just two per cent of the global Corolla total,” he says.
“The extension of the MIDP to 2012 is a positive sign for the development of the auto industry in SA but eventually South Africa may have to prove its competitiveness without the aid of incentives.”
He also urges the local supplier industry to build on its strengths. “The component industry is benefiting from growth and diversification. It now has 12 per cent of the world catalytic converter market and has seen significant growth in stitched leather components.
“With China and other low-cost economies becoming a magnet for component manufacture, it is imperative that South Africa focuses on its growing reputation for high-value, high tech and specialised products.
D’Arcy says that global light vehicle production over the next six years will see Asia Pacific countries account for 45 per cent of total world production, with China taking the lion’s share.
Speakers from South Africa and abroad were unanimous that the local auto industry would face a challenge from China, its strongest competitor for future investment.
He explains that “South Africa is a very small player in a very large global market. Automakers need a compelling reason to retain their interests in South Africa and recent growth is guarantee of sustainability”.
D’Arcy predicts a significant rationalisation of assets by the main car makers which could lead to closure of up to 45 assembly plants around the world.
An option open to the South African industry is the move away from its focus on right-hand-drive production, while building on its export programme.
“Since the introduction of MIDP, car makers with export programmes have moved towards assembly of more volume on fewer platforms, but it should be remembered that these volumes are very small in global terms. Toyota Corolla assembly here is just two per cent of the global Corolla total,” he says.
“The extension of the MIDP to 2012 is a positive sign for the development of the auto industry in SA but eventually South Africa may have to prove its competitiveness without the aid of incentives.”
He also urges the local supplier industry to build on its strengths. “The component industry is benefiting from growth and diversification. It now has 12 per cent of the world catalytic converter market and has seen significant growth in stitched leather components.
“With China and other low-cost economies becoming a magnet for component manufacture, it is imperative that South Africa focuses on its growing reputation for high-value, high tech and specialised products.
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