If South Africa is to maintain a major manufacturing presence in vehicles and components, it must find ways and means of doing so in the face of competition from emerging markets, otherwise it will become an automotive backwater, according to Garel Rhys, director of the Centre for Automotive Research at the University of Wales and one of the world’s foremost industry commentators.
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Rhys believes the emerging markets of China, South East Asia and Eastern Europe will have a “profound effect” on the South African automotive industry.
The motor industry is exploding into new markets which, in 20 years, will account for more vehicle production than the traditional centres of production in the triad of North America, Western Europe and Japan.
Rhys said: “This will also have a profound impact on the long established, but more marginal vehicle making countries like Australia and South Africa.
“The challenge posed by the emerging major industries in China and India, but also Thailand, Brazil and Russia, affects not only the ‘triad’ but also countries like South Africa, Argentina and Malaysia.”
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By GlobalDataHe added that the South African automotive industry must integrate with the global activities of the vehicle manufacturers and component suppliers. In this way it can become the centre of, and responsible for, various products and projects.
These products must be made for a wider market than South Africa so that sufficient economies of scale can be achieved to establish a cost base that allows profits to be made at competitively determined prices.
Rhys said: “If South Africa is to retain and grow its vehicle supply sector the operations must offer products of high quality at globally determined prices. After all, it is much easier to transport components around the world with low transport costs than vehicles.”
The question of whether the South African automotive industry is fully equipped to take on the threats and opportunities presented by emerging markets will be addressed at this year’s South Africa Automotive Conference in Johannesburg from 7 and 9May.
A line-up of international speakers will address the need to find new solutions to the problem of how to survive in a global market. These include Rhys, Andrew Chien, president and managing director, Ricardo Strategic Consulting, North America, Ashvin Chotai Asia specialist for Global Insight John Boley, communications director of the World Cargo Association based in Bangkok, Henry Grimbeek director, corporate services – Nissan South Africa and Kobus van der Wath, managing director, The Beijing Axis, business director, South Africa China Business Association and vice president, Asia Pacific South Africa Chamber of Commerce.
