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Components demand a good sign for SA’s automotive industry

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Growth is set to be bigger after 2021 when government policy demanding more than 50% local content kicks in

Promising growth in demand by vehicle manufacturers for SA-made automotive components cannot hide underlying challenges faced by the local components industry, a report noted on Thursday.

This is well ahead of vehicle production growth. The top 25% of suppliers grew sales by 16.5%. Average job numbers grew 3.5% over the period. Among leading companies, the figure for 2018 alone was 6.4%. Average supplier operating profits rose 6.2% in 2017 and 4.3% in 2018. Productivity also improved.

That’s not good news in an industry where component-sourcing decisions are taken in Europe, Asia and the US. Also concerning is that, according to the B&M report, fewer motor companies believe there are opportunities to increase purchases from current direct suppliers, or to commit to longer-term relationships. Despite this, Naacam director Renai Moothilal said: “Opportunities exist in the areas of supplying more of current products, supplying additional products in the existing range, and supplying newly developed products.

 

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