SA helps Nigeria set up vehicle industry

By Roy Cokayne Time of article published Oct 16, 2014

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Roy Cokayne

SOUTH African-based vehicle manufacturers, automotive component manufacturers and analysts have played down the potential threat to the domestic industry from Nigeria, which is developing its own automotive industry.

Robert Houdet, the executive director of the National Association of Automotive Component and Allied Manufacturers, said yesterday that he had worked in Nigeria for three years and, taking into consideration all the challenges facing Nigeria, it would take a long time before Nigeria became a viable automotive production centre.

Nigeria’s automotive industry would buy components from South Africa provided they were competitively priced, otherwise they would buy these components elsewhere in the world, Houdet told the SA Automotive Week conference.

South Africa’s Department of Trade and Industry has been assisting Nigeria with the development of its automotive development programme and former trade and industry minister Alec Erwin was a consultant to the Nigerian government on the development of the programme.

Justin Barnes, the chairman of Benchmarking and Manufacturing Analysts South Africa, said Africa was the big opportunity for South Africa’s automotive industry and, with regard to the perceived threat from the development of Nigeria’s automotive industry, believed “rising water lifted all ships”.

“The basics of economics suggest that if they can create a sizeable market, we will all benefit from it. I don’t think its wrong supporting the Nigerians, but I think we should be playing it closer to home and focusing on our immediate neighbours,” he said.

Barnes added that South Africa should also be having serious engagements with its neighbouring countries on how to free up these markets and stressed the importance of banning second-hand car imports.

“I don’t see how you develop anything in Africa if you don’t ban second-hand car imports or make them incredibly expensive,” he said.

Goran Roos, an advisor to the Australian government on its automotive sector and manufacturing strategy, believed the South African government’s assistance to Nigeria would work well in the early phases, provided Nigeria’s growth was sufficiently large to underpin all the other activities that took place.

“Over the coming 10 to15 years you [South Africa] will be absolutely fine, but at some point when Nigerian growth slows down, they will start to look around about what they have to do to look after their own house rather than the joint house of the two of you,” he warned.

Theunis Rootman, the chairman of the OEM Purchasing Council, said the development of a Nigerian automotive industry was not a deterrent but an opportunity for South Africa’s automotive industry.

But he said the realisation of these opportunities was dependent on South Africa’s industry working together to create and grasp these opportunities and be a real role player in the market.

Johan van Zyl, the president and chief executive of Toyota South Africa, said sales into the African market were between 1.7 million and 1.8 million vehicles a year in the 54 countries on the continent.

He said the South African market would account for about 630 000 units of the 1.7 million vehicles sold this year in Africa, which would grow to about 3 million vehicles by about 2015.

“The biggest market in Africa at the moment is South Africa followed by Algeria and Egypt and then the smaller markets of Nigeria, Kenya and Angola,” he said.

“Collaboration and export of components is possible.”

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