DESPITE challenging macroeconomic factors, the South African automotive industry will show continued growth over the next five years.
This is the opinion of PWC global automotive expert Richard Hanna, who was sharing his industry insights last night at the Beach Hotel in Port Elizabeth with invited guests from the Eastern Cape automotive sector. He will today meet representatives from vehicle manufacturers and suppliers in Durban, having addressed industry leaders in Gauteng on Monday.
Speaking to The Herald before his talk, Hanna said he caused quite a stir in Gauteng with his forecast that the government’s target of producing a million vehicles by 2020 would not be met, given the growth factors in the country.
If no intervention resulting in better economic growth occurred within the next five years, Hanna predicted an adjusted forecast of between 700000 and 8000000 vehicles produced a year by 2020. South Africa currently produced 600000 units a year, which still made it a strong competitor.
Hanna said negative factors for the industry were the high interest rate, weak rand, high unemployment rate and labour instability. South Africa’s reputation was badly damaged by the seven-week National Union of Metalworkers of South Africa strike last year, he said.
“The country is competing with other locations around the world and labour is a key element of any investment. Manufacturers can only honour their commitments with a stable labour force,” Hanna said.
Globally the automotive industry was strong and showed a lot of growth, with recovery in particular in Europe and North America after the recession and strong growth in the emerging markets of Asia, he said.
“We do not expect what happened in Australia, with the last vehicle manufacturer announcing it will stop production in the country, to happen in South Africa. Australia is very isolated from the rest of the world and their volumes did not make sense in that economy and industry environment.”
Hanna said the growth opportunities of SA as the gateway into the rest of Africa, were very high.
“Despite political instability and infrastructure concerns, Africa is opening up as a major market in the world and we are optimistic about the future of Africa and the opportunities it holds for South Africa.”
Hanna said his advice to automotive industry leaders in the Eastern Cape would be to continue lobbying government bodies to develop pro-business policies.
Another important growth strategy would be to bring more suppliers into the province to offer a long-term supply base for the industry, which would ultimately result in more jobs.
PWC Port Elizabeth managing partner Andrea Puggia said with investments such as the R5-billion invested by Mercedes-Benz in East London, the outlook for the automotive industry remained positive.