More job growth likely in car sector

DESPITE subdued economic growth, employment levels are steady in the South African automotive sector, with companies expected to invest a record capital expenditure this year.

In its quarterly review of business conditions in the automotive sector, the National Association of Automobile Manufacturers of South Africa (Naamsa) predicted the automotive sector's stable employment levels would increase as vehicle manufacturers ramped up production for export markets.

Mercedes-Benz South Africa (MBSA) last week launched its much-anticipated next generation C-Class, of which 85% of cars produced in the Eastern Cape will be exported across the world.

The number of jobs in the country's new vehicle manufacturing industry – which includes Eastern Cape vehicle manufacturers such as East London's MBSA and Nelson Mandela Bay's Volkswagen Group South Africa, General Motors South Africa and Ford South Africa – for the first quarter of the year averaged 29904. This is a slight increase of 47 jobs compared to the first quarter of last year.

Naamsa director Nico Vermeulen said a record projected industry capital expenditure of R7.92- billion was expected this year, compared to last year's capital expenditure of R4.35-billion and 2012's R4.68-billion.

He attributed this increase to investment projects by manufacturers in terms of the Automotive Production and Development Programme and based the prediction on information supplied by SA's seven major vehicle manufacturers and various truck producers.

Since announcing the C-Class investment in 2010, MBSA has ramped up the plant for the production of the C-Class with a total investment value of R5.4-billion.

MBSA will double the manufacturing plant's capacity by next year and had already started operating a third shift.

The production capacity of vehicle producers is about 850000 vehicles per year, with most sectors registering further recovery from last year's strike action.

Vermeulen said the upward momentum for vehicle exports this year came on the back of last year when total automotive exports broke through the R100-billion barrier.

"The industry's top markets in value terms were Germany followed by the USA."

However, Vermeulen cautioned the domestic market was likely to register a decline of about 3.5% compared to last year.

Cars in numbers:

• 11.1% of the country's total exports last year were automotive exports, including components and vehicles;
• 30% of the country's manufacturing output is produced by the automotive sector;
• 72% of vehicles produced in Africa last year were produced in SA; and
• 51 brands and 2295 passenger car model derivatives were available in the SA market. - Cindy Preller