South Africa's automotive industry could face a similar scenario to the local textile industry unless it becomes globally competitive by the time the current motor industry development programme ends in 2012.

"The only way we can protect the investments in South Africa, including the hundreds of thousands of people reliant on the industry for employment, is to become globally competitive on all fronts," Bill Stephens, the communications general manager of Volkswagen South Africa (VWSA), said yesterday.

Stephens told the second SA Automotive Conference in Port Elizabeth that the local industry's global competitiveness would be severely tested with the end of ad valorem protection of 25 percent for vehicles and 20 percent for components in 2012.

He said the local industry would need to dramatically reduce the cost gap between world-class benchmarks.

China had emerged as a major threat and South Africa could not allow it to impact on the local industry's export potential and become a player in the domestic component supply programme, he said.

"The only way we can combat this threat is to become world class. The industry, therefore, needs to reach the same productivity rate and quality standards as regions such as Europe, China and Brazil.

"We have to be price competitive with these global giants not only in terms of costs of imported parts, but on an ex works price basis," he said.

Stephens added that only global competitiveness would give the local component supply base stability and the opportunity to play a more significant role in the industry's global strategic sourcing decisions.

He stressed that vehicle makers and component suppliers would have to review their business plans and investment strategies to accommodate growth potential and the pressure of international competition.

He said there was no doubt the local industry had largely "gone global", adding that vehicle exports had practically doubled in volume since 2000 and now constituted 26 percent of domestic production. The value of vehicle exports had trebled and component exports nearly doubled in the same period.

Garel Rhys, the director of the Centre for Automotive Industry Research at Cardiff University Business School, said more vehicles would be made in the next 20 years than in the previous 110-year history of the industry and motor companies would have to build 180 new assembly plants producing 300 000 vehicles a year to meet increased demand.

Rhys said most existing factories would have to be renewed, retooled, refurbished and replaced to remain competitive and there was "nowhere for the inefficient to hide".