SA automotive exports hit a record
EXPORTS by South Africa’s automotive industry grew by 12.7 percent to a record R115.7 billion last year from R102.7bn in 2013, despite a significant decline in the value of exports to some African countries, particularly Nigeria and Algeria.
Norman Lamprecht, an executive manager at the National Association of Automobile Manufacturers of South Africa, said although the value of exports to sub-Saharan countries increased year on year in 2014, vehicle exports to the industry’s top destinations in Africa – Algeria and Nigeria – reflected a substantial decline due to import regulatory changes being implemented on new vehicle imports.
Nigeria and Algeria last year both imposed higher tariffs on new vehicle imports to drive policies promoting local vehicle assembly.
The value of South African automotive exports to Algeria slumped by 70 percent to R923.3 million last year from R3.1bn in 2013 and to Nigeria by almost 14 percent to R1.76bn from R2.05bn, according to the latest South Africa Automotive Export Manual.
Azar Jammine, the chief economist at Econometrix, said on Friday that there was a distinct danger that South Africa’s automotive industry could “lose out” to Nigeria within the next 10 years unless the country started improving its competitiveness. He said the industrial relations the automotive sector had been confronted with in recent years persisted and South Africa needed “a huge wake-up call”.
The unstable labour environment was one of the key issues facing the automotive industry, but the country’s transport and logistics costs could also not be ignored.
Trade and Industry Minister Rob Davies confirmed in 2013 that the government had been supporting Nigeria in the establishment of its own motor manufacturing industry, adding that South Africa could benefit if Nigeria developed a motor manufacturing industry because it would supply it with semi-knocked down (SKD) vehicle kits.
Former trade and industry minister Alec Erwin was a consultant to the Nigerian government on the development of the programme.
Aminu Jalal, the directorgeneral of the Nigerian Automotive Council, said in October that 23 companies had signed commitments with technical partners to assemble vehicles in Nigeria in response to the launch of the programme.
Jalal said the Stallion Group had entered into a partnership with Nissan and started assembling Nissan Patrol, Almera and NP 300 Hardbody models on an SKD basis; SKD production of the Peugeot 301 had commenced in July; Dana Motors would start assembling KIA and Renault vehicles before year-end; and Volkswagen, Toyota, Ford and Tata Motors were conducting feasibility studies on assembling vehicles in the country.
Total automotive exports from South Africa to Africa increased last year by 4.7 percent to R31.62bn from R30.19bn in 2013.
The International Organisation of Motor Vehicle Manufacturers said vehicle production in Africa grew by 9.6 percent last year to 831 000 units with South Africa accounting for 68 percent of the continent’s total vehicle production and Morocco and Egypt most of the balance.
Lamprecht, who compiled the SA Automotive Export Manual, said the EU remained the South African automotive industry’s most important trade partner, accounting for R109.2bn or 44.2 percent of the country’s total automotive trade of R247.2bn under the Automotive Production and Development Programme last year.
The EU also accounted for 48.4 percent of total automotive component exports and more than a third of South Africa’s vehicle exports in volume terms.
Lamprecht said the future of the original equipment manufacturers (OEMs) in South Africa was inextricably linked with that of international OEMs and was, therefore, subject to the same market forces driving or restraining growth.
He said globally OEMs were focused on relentless cost reductions to reduce prices through efficiency improvements, improved productivity and relocation of manufacturing closer to markets with high demand to avoid logistics costs, trade barriers and currency risks.
South Africa manufactures vehicles for the world, which means local suppliers must be able to deliver on technology and quality levels that are on par with those anywhere else in the world and at a comparable cost.