Economist Tony Twine says South Africa can become a leading player in the global market if it makes the transition from a batch producer to mass producer of vehicles.
Econometrix economist Tony Twine says South Africa can become a leading player in the global market if it makes the transition from a batch producer to mass producer of vehicles.
Twine told that a country can be defined as a mass producer when it produces two million vehicles a year and has a plant that can produce SA’s total production, about 400 000 units, in a few months.
”The fact that Americans today are driving SA-made BMW cars, an inconceivable thought 10 years ago, does not mean SA has become a vehicle-manufacturing powerhouse”, Twine said. He added that SA was still a minor producer in global terms.
Twine said although the local industry was making giant strides in integrating itself into the global supply chain, it produced less than one per cent of the world’s total new vehicle output.
In fact, Twine sees a component manufacturer having more of a chance of becoming the first mass producer in the country, and speculates it will take between 10 and 15 years for this to happen.
On Monday, the executive director of the National Association of Automotive Component and Allied Manufacturers, Clive Williams, said the industry should feel the benefits of its first automotive component export drive to Japan within the next three years.
South Africa exports about R20 billion worth of components, while domestic sales are forecast to reach R30 billion this year. The automotive components sector should generate six per cent of SA’s GDP this year.
”In the past five years the domestic sector has undergone a revolution and is now world competitive,” Williams said, adding “there is incredibly big” potential in the Japanese market for domestic companies.
If we could get even a fraction of Japan’s automotive business, we would do very well,” he said. “SA companies are now on the list of Japanese automotive companies that would otherwise not have considered South Africa as a source of components”.
Twine added: “In becoming a mass producer, a stronger relationship between the local manufacturer and their global company will have to be developed.”
Twine pointed out that it was only when Toyota Japan took control of the local SA company from the Wessels family that it embarked on an export programme.
