This is the view of a number of players in the automotive sector, particularly in the short term.

They include the National Union of Metal Workers’ of SA (NUMSA) and Rhodes University who don’t believe that the rand’s strength will cost the sector many jobs.

It is one also expressed by Eastern Cape Development Corporation’s automotive sector leader Zola Tshefu. “I also share the view that there is unlikely to be job losses in the short term. However, if the rand remains strong in the medium to long term, it will impact on jobs as imported cars and parts become cheaper and this displaces demand for locally produced products.”
NUMSA’s national spokesperson Dumisa Ntuli questioned the statistics of Automotive Components Manufacturing Organisation (NAACAM) who had earlier said that the rampant rand undermined export-based enterprises which resulted in job losses.
DaimlerChrysler and Delta Motor Corporation also said that there would be pressure on profits because a large percentage of their sales were exports. They added that it made securing new and existing contracts difficult. DaimlerChrysler cited their good labour relations as a reason for no job losses. Delta said that they were focusing on introducing efficiencies and other cost containment measures as a means of reducing the impact of the strong rand. Tshefu, however, sees a greater risk for component exporters. “The effect of the rand’s strength could be felt soon as existing contracts expire and new contracts are lost due to local prices being uncompetitive.

“Similarly, manufacturers of local components face the threat of lower priced imports on the after-market. A loss of jobs in the component manufacturing sector through cheaper imports, a loss of local after-market sales and ultimately less local content in locally assembled vehicles if the rand’s strength persists are the more likely scenario.”

She says that the stronger rand may have an impact on future jobs, where future investment projections are based on a weaker rand. In these cases, a stronger rand will mean that the projections will not be realised and therefore these investments will not be undertaken. Rhodes University economic department Professor Hugo Nel said that while the strengthening rand could put pressure on the exchange rate and result in pressure for profits, one also had to remember that there was still a domestic market. However, there would also be pressure to improve production levels and wage increases.