Discussions between Nissan South Africa and its Japanese parent company over the expansion of its export territory to include Europe are moving in a positive direction.
Nissan SA managing director Mike Whitfield said this week a decision on an export contract to Europe was expected early next year and would involved its one ton pickup.
However, Whitfield said the initial volumes for any export contract to Europe would be fairly small but going forward represented a sizeable opportunity.
Whitfield said the discussions about Nissan SA expanding its export territory were line with the stated intention of the Nissan Motor Company of Japan.
Nissan Japan has been actively shifting supply from Japan to other countries because of the impact of the strength of the Japanese Yen to the company's profitability.
Whitfield said the South African motor manufacturing industry would not produce 1-million vehicles a year within the next five years and the domestic market would only get back to its 2006 sales leevls of about 650 000 in about 2014 or 2015.
He anticipates domestic new vehicles sales to grow year-on-year by between 5 percent and 8 percent next year and the strength rand not to significantly weaken, which would have spinoffs for the domestic market but be negative for exports.
Whitfield said the 50 000 production threshold in the new Automotive Production and Development Programme (APDP) for motor manufacturers to qualify for incentives available in the programme was a fundamental part of the programme and Nissan SA intended to build more than 50 000 units a year.
However, Whitfield said the South African motor manufacturing industry was facing a number of challenges, including the time it took for the domestic market to recover from the global financial crisis and the country's high logistics costs, including the need for the country's ports to be competitive.
Whitfield said the motor industry had to be competitive for the duration of the APDP.
If South Africa was to be a major player in the export market and be involved in value enhancement, it had to ensure the country's energy and logistics costs were competitive.
We have got to find a way to ensure that our automotive components aren't at a 20 percent premium to what you can buy them for in Asia. You need to look at the total delivered cost and energy, logistics and ports costs, he said.
Whitfield stressed it was vital to ensure that South Africa's motor manufacturing industry was competitive, particularly because of the disadvantage it faced because of its distance from the major markets.
He said it was also important for government to expand the country's trade agreements responsibly, stressing that its competitors were Asia, India and Brazil.
Believe me, they have protection in their motor industry. We do too but not to the same level, he said.
Whitfield said it was important for the domestic motor industry to be manufacturers rather than assemblers because the higher level of value added beneficiation protected and grew jobs in the industry.