According to Naamsa’s latest quarterly review of business conditions, the South African car manufacturing capacity utilisation rate rose to 81,4 per cent in the second quarter of the year.

According to Naamsa’s latest quarterly review of business conditions, the South African car manufacturing capacity utilisation rate rose to 81,4 per cent in the second quarter of the year.


The second quarter figure compares with 72,3 per cent in the first quarter and the association said it expected South African manufacturers to produce 313 000 cars this year and 355 000 in 2005 compared with 291 249 built last year, 276 499 in 2002, 230 577 cars in 2000 and 193 212 in 1998.


Capital expenditure by the motor industry was on track to reach about R3,6 billion this year, compared with R2,3 billion in 2003 and R2,7 billion in 2002. Naamsa attributed the decline in capital expenditure last year to the strength of the rand, which resulted in lower costs of imported capital investment.


In addition, aggregate industry employment levels increased by 814 jobs between the first and second quarter of the year to 31 708 jobs. Naamsa also reported that an increasing number of manufacturers opted to operate on a multi-shift basis in the production of vehicles and components for domestic and export markets. The balance of the industry tended to operate on a single production shift basis, although a number of manufacturers operate double shifts in selected areas (machining areas, press shops, paint shop operations and body shops).


The association noted that overall, the availability and supply of imported original equipment components, during the quarter, remained satisfactory. Prices from source remained stable and landed costs of imported components benefited from the Rand’s strength. “However, increased shipping costs were again cited as a concern (by manufacturers),” a Naamsa spokesman said.


The overall supply of local components during the second quarter of 2004 was satisfactory, Naamsa noted. But on pricing, suppliers experienced difficulty in competing with imported products… Labour, steel and fuel costs were cited as having the biggest impact on local costs for the balance of the year.


In general, the availability of imported raw materials, where applicable, was satisficatory, Naamsa said. However, global commodity and crude oil price increases pushed up costs, partially offsetting the effect of the improvement in the exchange rate.


“Local raw material price movements continue to mirror international pricing trends. Generally, availability remains stable, however, instances of shortages of local steel were reported,” Naamsa director Nico Vermeulen said.