Shipping group Safmarine believes the immediate outlook for automotive exports from South Africa is positive in light of ongoing investments by established and emerging original-equipment manufacturers (OEMs).

Safmarine global key account manager Dave Everett notes that the sector attracted major investments from Ford and Chinese State-owned car manufacturer Beijing Automotive International Corporation (BAIC) last year, which bodes well for one of the country’s largest manufacturing sectors.

He points out that some local car manufacturers export up to 70% of the vehicles and components they manufacture, mostly to other countries in Africa and Europe. “Based on January’s figures and current economic conditions, exports, particularly to Europe, can be expected to remain strong, and will likely take up any excess volume there may be from production in South Africa.”

The impact that the car manufacturing sector has on import container trade is fairly direct, as OEM volumes, comprising car parts and components, provide regular and largely predictable container flows based on required weekly volumes from suppliers to OEM assembly plants, explains Everett.
The R11-billion BAIC plant currently under construction at the Coega industrial development zone, in the Eastern Cape, will further boost South Africa’s container trade activity once completed, he adds.

“This is the biggest investment in a vehicle-production facility that the country has seen in some time, and is essentially a commitment from yet another OEM to build vehicles in South Africa.”

Simultaneously, the majority of supply and shipments will most likely be controlled from China, and BAIC will benefit from government’s Automotive Production and Development Programme (APDP) for manufacturers in South Africa, he says.

Everett highlights that local container volumes will be driven by OEMs’ competitiveness to manufacture vehicles in South Africa. “Every manufacturer is driven to build vehicles at a competitive cost relative to their other plants around the world,” he says, adding that OEM volumes are likely to grow if benefits of assembly in South Africa, such as quality, continue to outweigh cost and supply chain constraints.

Each OEM will continue to balance these factors for the models and volumes they produce here, he asserts.

The outlook for South Africa’s car manufacturing sector in 2017 is positive, Everett asserts. However, the long-term future of the industry is not as certain. “For the short- to medium-term, we perceive that the current OEMs are committed to South Africa and continue to invest to greater or lesser degree in assembly here.”