Automotive sector unfazed by fast changes

Warnings that new local entrants in the vehicle components industry risk their products becoming obsolete because of rapid advances in technology and materials are unfounded, says Ugo Frigerio, president of the National Association of Automotive Component and Allied Manufacturers (Naacam).

Critics of government automotive policy warn that pressure for more local investment, particularly by small black industrialists, ignores the fact that many of the parts that go into today’s vehicles will not be around much longer. They will either disappear altogether or require different materials.

The most obvious example is the global shift away from the internal combustion engine, towards all-electric motors. But there are many more, less obvious changes across the entire automotive design chain.

Volkswagen SA managing director Thomas Schaefer says a scattergun approach to future local content is risky. The government and industry should take a long-term strategic view on what components and technologies are best suited to SA.

Frigerio, however, said in an interview that the SA supply industry was capable of dealing with changing industry demands. “Our major vehicle manufacturers are all part of global networks. As new technology appears, they will ensure their supply base has the means to cope.”

Motor industry policy from 2021 will require SA motor companies that hope to access government investment incentives, to increase the value of local content in their vehicles to at least 60%. The current industry average is below 40%.

To get there, and to meet government demands for more black participation in the industry, companies will have to stimulate the creation of hundreds of black suppliers.

A R4.5bn fund, using money from motor companies, will pay for this.

Most of the new participants will be at sub-supplier level, providing parts and sub-assemblies to the major components producers that supply completed parts direct to vehicle assembly lines.

It is the smallest sub-suppliers – producing a narrow range of small “widgets” – that are considered most at risk from changing product demands.

Frigerio, however, said: “New-generation vehicles will still need widgets. What will change is how they are made, and what they contain.”

Assuming quality and costing was up to scratch, motor companies and major components suppliers would help newcomers’ transition to new manufacturing processes. —