Johannesburg International Motor Show

Motor Industry President Cautions on Medium Term Outlook

Motor Industry President Cautions on Medium Term Outlook
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The medium term outlook for the automotive sector in South Africa will continue to be affected by the overall performance of the economy and by new vehicle pricing pressures as a result of rising costs and the impact of the weaker exchange rate, according to the president of the National Association of Automobile Manufacturers of SA (NAAMSA), Dr Johan van Zyl, speaking at the official opening of the Johannesburg International Motor Show yesterday.

He explained that above inflation new vehicle price increases will result in some moderation in the rate of sales growth in the remainder of 2013 and into 2014.

“However, various factors should lend support to the industry and these include the continuing low interest rate environment, low debt servicing costs, strong replacement demand, the highly competitive trading environment with attractive incentives and the introduction of new, high technology models, many of which are being showcased at the Johannesburg International Motor Show,” added Dr van Zyl

“On the other hand we have rising inflationary pressure facing consumers which will affect real disposable income and this could also impact on future vehicle sales.”

The NAAMSA president went on to explain the importance of a strong export market for the sustainability of the local motor industry and here he said  it was unlikely this year’s shipments would reach the projected 337 000 vehicles due to the recent prolonged industrial action experienced by the vehicle and component manufacturers. He said the length of the strike – seven weeks – was unprecedented in the history of the local motor industry.

Expanding on the “negative consequences of the unfortunate and unnecessary industrial action” the NAAMSA president stressed that labour stability is essential for the growth and development of the SA automotive industry as well as associated employment creation.

“NAAMSA, together with other stakeholders, namely government and labour, will address the issues which have contributed to the industrial action experienced by the industry. We will do so in a spirit of constructive cooperation to develop enduring solutions to ensure that the events of the past few months do not reoccur,” added Dr van Zyl.

He explained that the industry needs a stable environment in which to conduct its manufacturing operations and this was vital to ensure that the country remains attractive as an investment destination in an extremely challenging global economic environment.

“I know that all the automotive multi-nationals in South Africa remain committed to the long term growth and development of the industry and labour stability represents an important and essential building block to safeguard the industry’s future,” said the NAAMSA president.

Dr van Zyl went on to say how fortunate the local industry was to have the APDP in place with its joint vision by government and the industry to more than double annual vehicle production in SA to 1.2-million vehicles by 2020, with a significant increase in value addition.

“While the target is challenging NAAMSA has no doubt that the APDP will result in significant growth in vehicle production, localisation and employment creation through 2020.

“However, it is imperative for the local component and vehicle manufacturers to achieve progressive and substantial improvements in operational efficiencies to ensure continued foreign direct investment. In this context our industry is committed to the supplier competiveness improvement initiative announced at today’s event by the Minister of Trade and Industry, Dr. Rob Davies,” added Dr van Zyl.

He went on to say that supply chain competiveness is central to the ability of the SA automotive industry meeting the objective of producing 1.2-million vehicles by 2020 on a sustainable basis.

During his address the NAAMSA president said the biennial Johannesburg International Motor Show was an ideal place in which to showcase the sophistication, quality and innovation of the South African automotive manufacturing, importing and distribution operations.

“Not only does the show market the South African motor industry, its products and technologies but it also projects the industry’s global competitiveness with the launch of new products and technologies as well as complementary services to an increasingly demanding and discerning customer base,” commented Dr van Zyl

“The investment by the industry in the 2013 motor show runs in excess of R300-million and comprises more than 350 exhibitors. It is a mind-blowing event,” concluded the NAAMSA president.

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