Naamsa bats away criticism of South Africa’s automotive policy

22nd May 2015

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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Criticism of the Automotive Production and Development Programme (APDP), attributed to the National Association of Automotive Component and Allied Manufacturers (Naacam) at the APDP conference in Johannesburg in May, “lacks perspective and is in many respects factually incorrect”, says National Association of Automobile Manufacturers of South Africa (Naamsa) president Dr Johan van Zyl.

“The APDP provides a clear, albeit ambitious, vision for the South African automotive industry through 2020.

“The programme was formulated on the basis of extensive consultation with industry stakeholders – ultimately, with their full buy-in. The APDP represents a carefully structured set of provisions to support the future growth and development of the industry by balancing the interests of consumers, the broader auto industry and government’s objectives.”

Van Zyl says the APDP target of producing 1.2-million vehicles by 2020 was formulated in 2007 – prior to the global financial and economic meltdown, which severely impacted on the global economy and on South Africa.

“A more realistic target – based on current global realities, existing vehicle production plans, as well as the possibility of new entrants – is probably around 850 000 vehicles produced by 2020.”

He adds that positive industry performance benchmarks and achievements, to date, include

“massive investment by multinational vehicle manufacturers (and component suppliers) in manufacturing facilities and enhancements”. “Capital expenditure by the seven major vehicle producers over the last five years amounted to more than R24-billion. Projected capital expenditure by the vehicle manufacturers for 2015 is R7.5-billion.

“Significant model rationalisation has resulted in a reduction from 42 platforms produced in South Africa 20 years ago, to 12 platforms today. This, in turn, has contributed to substantially higher volumes per model produced and has generated economies-of-scale benefits and reduced complexity for suppliers.

Employment in the vehicle and components manufacturing sectors has held up well. “Employment by vehicle manufacturers, on the back of higher production numbers, has increased by 1 200, to over 31 000 jobs over the past 15 months.

“The industry’s trade deficit has started to decline as a result of strong growth in vehicle exports; 2015 is on target for record industry vehicle production of around 630 000 units.

“Official figures confirm continued and sustained growth in components suppliers’ sales to vehicle manufacturers. Moreover, the level of domestic value creation has increased dramatically over the past two years on the back of additional localisation and higher production. In fact, total local APDP value addition rose from R41.8-billion in 2013 to R47billion in 2014 – an increase of over R5 billion, or 12.3%, in the first two years of the programme.”

Van Zyl says Naamsa regards stability in the automotive industry developmental policy framework as a key imperative to drive industry investment and future growth and development.

“In the final analysis, strong global linkages, supplier development and competitiveness improvement will remain critically important to support the sustainable future development of the South African automotive industry.

“Many of the challenges confronting the South African supplier industry are a reflection of difficult conditions in the global automotive industry, characterised by a relentless focus on cost reductions and efficiency improvements.

“The only way to address the issues is through the achievement of world-class manufacturing standards and improved supplier competitiveness in South Africa and not through additional protection as propagated by Naacam.”

Van Zyl notes that competitive suppliers will remain strategically important to the future of the industry.

In this regard, Naamsa initiated the Automotive Supply Chain Competitiveness Improvement programme, aimed at deepening the local components supply chain and growing local value addition, while also introducing interventions such as the pooling of manufacturer volumes to enhance localisation opportunities.

“The Motor Industry Development Programme, implemented in 1995, and its successor, the APDP, implemented in 2013, represent one of the most innovative and successful pro- grammes to retain a domestic vehicle and components manufacturing industry, which has continued to contribute positively to the South African economy and society.”

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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