The motor industry is on the cusp of technological revolution and on the local front, OEMs and suppliers need to strengthen labour relations and improve competitiveness in order to flourish and remain relevant on the international stage. These were the major themes highlighted by speakers during the 2013 CAR Conference, in association with Tracker, which took place at Nascrec during the Johannesburg International Motor Show this week.
The Conference was opened by CAR publisher Neil Piper and the master of ceremonies was the charming Barlow Manilal, the chief executive officer of the Automotive Industry Development Centre (AIDC). This year’s keynote address was delivered by US-based technology consultant Doug Newcomb, who spoke broadly about the connected car, from always-online in-car monitoring, information and communication systems to cars that will ultimately drive themselves.
The connected car – it’s coming and soon
It is estimated that by 2020, by which point the South African motor industry hopes to produce 1,2 million vehicles per annum, there will be 50 billion connected devices round the globe. People want to stay connected at all times, especially when they’re driving, Newcomb said, adding that in-car technology is as big a selling point for vehicles as exterior styling.
He added that on-board applications served more purposes than providing entertainment and information to cars’ drivers and occupants: the communication between vehicles through data sharing would pave the way for a motoring world that was safer, more efficient and most significantly, autonomous. With Google hoping to have an autonomous car on the market by 2017, Newcomb went as far to suggest that by 2040, a driver’s licence would be superfluous because all cars could be self-driven.
Autonomous vehicles raised questions on driver liability and consumer acceptance because individuals would be required to give up some of their privacy for a central operating network to function, but Newcomb stressed it was not a matter of if, but when the connected car would become a part of motoring life – it will be a platform for productivity and transportation.
Garth Strachan, the acting deputy director-general of the government’s industrial development policy development department, then outlined the state’s vision for the automotive industry and how is industrial its policy frameworks would drive this vision.
1,2 million by 2020 – or bust
Naamsa president and chief executive of Toyota South Africa Dr Johan Van Zyl spoke energetically about the viability of the South African motor industry production target of 1,2 million vehicles per annum by 2020. Despite the recent upheaval due to extended strike action during wage negotiations between Ameo (which represents the manufacturers) and Numsa (the metal workers association), Dr Van Zyl was confident that there was adequate regulatory support for the industry through the APDP and a stable economic policy in place.
However, the output target of 1,2 million would be difficult to achieve unless the local motor industry could increase its export output by 190% and grow the domestic market by 6,7% per year, he added. Moreover, South Africa needed to seek out and remedy the sources of the country’s relative lack of competitiveness compared with other (rival) production locales in the global automotive industry.
Dr Van Zyl concluded by saying improved rail capacity, a reduction in port costs, localisation of suppliers (economies of scale could be exploited if OEMs shared suppliers, he pointed out) and making better use of South Africa’s resourcefulness (not having to pay international prices for locally-sourced materials) would pave the way to achieving the 2020 target.
Even if ZA is underperforming, “things could be worse”
Dr Van Zyl’s presentation was followed by a no-nonsense perspective on the South African economy and its prospects for the near future by charismatic chief economist for First National Bank Sizwe Nxedlana. In predicting an inflation rate of under 6% for the next two years, with interest rates expected to nudge upwards in the first half of 2014, Nxedlana said the key to achieving sustained gross domestic product (GDP) growth as stated in the National Devlopment Plan (NDP), was enhanced competitiveness.
The recent surge in the JSE was due to large-scale investment in defensive, higher-yield stocks, not because of a high level of business confidence – far from it, he explained. Nxedlana further warned that the domestic demand generated by the recent government stimulus package was expected to abate in the near future, with slower non-mortage credit extension and lower fixed investment from the private sector.
An uncertain political environment and labour unrest, as evidenced by Marikana and the recent motor manufacturing and allied industry strike, was putting massive pressure on the sustainability of the industry’s export programmes.
“There exists political constraints to optimal economic policy,” Nxedlana was quoted as saying. “There are holy cows we need to overcome politically” to reach a compromise and successfully implement the NDP and achieve GDP growth of around 6 per cent.
Next up was Dr Martin Zimmermann, president and CEO of Mercedes-Benz South Africa, who spoke on how technology was driving change in local vehicle production and its impact on the workforce and the long-term benefit export programme.
Mercedes-Benz had upped the efficiency of its East London plant by 30 per cent since 2008 and its facility was regarded as one of Daimler’s best outside of Germany, Dr Zimmermann said, but added: “it not good enough to have a globally competitive plant without a globally competitive supplier base” and, in a thinly-veiled reference to the recently-resolved labour dispute in industry: “the future of export programmes and foreign investment in South Africa depend on the country’s international reputation”.
Dr Zimmerman also reaffirmed Mercedes-Benz’s commitment to the development and upliftment of the country: “We have gone to great lengths to harmonise with our workforce and interact with the Eastern Cape community as a whole”.
From one-stop shop to specialisation
Meanwhile, Jakkie Olivier, the chief executive of the Retail Motor Industry organisation spoke about how “technology was driving change in the retail motor industry, especially at an operational level”. With a car parc of 11 million vehicles in South Africa, the automotive aftermarket (the RMI represents 14 associations and 18 000 business) was forced to respond to the rapidly growing complexity of vehicles being brought to market, including powertrains, body engineering diversity, electronics and connected technology (software and controls, including vehicle-to-vehicle and vehicle-to-infrastructure connections).
One of the biggest challenges was the gap between new vehicle technology and repair technology, Olivier stressed. Automotive service and repair businesses needed better access to repair information, had to contend with high costs of specialised tools and equipment, shortage of skills and thanks to “seasonal” wage disputes, serious labour challenges. A potential solution, he concluded, was to find synergies between new vehicle technology and repair technologies.
Prieska-born VW colour and trim manager Oona Scheepers, who has worked for Ford, Porsche and virtually all of the VW Group brands, then spoke about technology’s influences on design and kicked off her presentation with the provocative statements: “Passion remains the main requirement for Quality” and that “the best interior design attracts no comment – because as soon as something stands out it’s too much”.
Scheepers, who draws inspiration for her colour palettes from photographs of such esoteric sources as Free State thunderstorms, suggested that in VW AG’s opinion, there will be a million electric cars on the road by 2020. She also outlined some of the imminent as well as long-term automotive technologies that wil shape motoring in the future. It was a fascinating presentation by one of ZA’s finest exports.
Former McCarthy Motor Holdings chairman Brand Pretorius then closed the conference with an eloquent summation of the day’s presentation.
“We need to move forward to a low carbon motoring future, but remember to put the driver at the centre of technological advancement”, said Pretorius. “The future vehicle is a platform for productive, fuel efficient and safe motoring.
“We all want sustainable businesses, but as an economic boom is not on the horizon, we need to adapt to- and harnass the latest advances in technology.
“Customers have never been more valuable,” he added. “We as the motoring industry have an opportunity to focus, be enterprising, and as they say ‘make the dust – not eat the dust’.”