Components demand a good sign for SA’s automotive industry
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. The report, by B&M Analysts, was commissioned by the National Association of Automotive Component and Allied Manufacturers (Naacam). It shows that SA component suppliers grew average rand sales by 10.7% in real terms between 2016 and 2018. 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. The problem with these positive numbers is that many of them lag behind growth rates in rival supplier industries in developed and developing markets. Put simply, these markets are improving faster than SA — meaning local suppliers risk becoming less globally competi...
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