By Mike Whitfield
Having been in the automotive industry for some 30 years, I have experienced the good and the bad times. Being at the mercy of the economic gods comes with the territory. But through it all, we remain strong and vibrant.
We are in a downturn. On the domestic front is low economic growth, a weak rand and high consumer debt. Elsewhere on the continent has been the dramatic fall in the oil price, an inability to raise foreign exchange, currency fluctuations and inflation. This has had a knock-on effect on industry sales in South Africa and in many sub-Saharan African countries where growth is well below expectations.
Make no mistake. Our industry has stood the test of time and continues to play a significant role in our economy. Sales and production, particularly exports, were expected to contribute about 7 percent to South Africa’s gross domestic product (GDP) last year.
Mobility revolution
Much of our export growth is in Africa where automotive companies have realised the potential of sales driven by a growing middle class. South Africa stands to benefit from the coming mobility revolution north of the Limpopo.
But as the automotive industry takes advantage of the huge potential that Africa has to offer, we also recognise the need to adjust to changes in the sales environment. We fully expect that economic headwinds will remain this year. Falling currencies are already eating into consumers’ spending power.
As a result, one of my foremost automotive industry predictions for this year was that we would see a growth in affordable cars. Customers across the continent want value for money without foregoing the smart, accessible technology most cars today offer.
Cars are a vital part of this country’s manufacturing base, borne out by the fact that our automotive industry is one of the top 25 global markets. Together as manufacturers we produce 600 000 vehicles annually, supporting more than 100 000 manufacturing jobs and contributing around 7 percent of GDP.
As the automotive hub for sub-Saharan Africa, our industry is poised to be a key driver of growth for the future. To fully benefit from the growth in the continent, the South African automotive industry needs the support of the government.
Local manufacturing
The Automotive Production and Development Policy (APDP) plays a key role in guaranteeing local manufacturing, and we are pleased it will continue beyond 2020. Continuity of policy is key to decision-making in an industry like ours, in which we have to think many years ahead. We are confident the automotive sector will remain at the forefront of the minds of government policymakers in South Africa as they chart the growth of our country’s economy.
We look forward to continued support from the government to open the doors for the South African automotive industry across the continent. And we are confident the government of South Africa will play a leading role in bringing down some of the trade barriers that still make doing business in Africa a task for the most determined.
My election as president of the National Association of Automobile Manufacturers of SA (Naamsa) for this year has been a milestone for me personally. I appreciate the recognition of my peers and their confidence in me as we work together in the interests of the South African automotive industry and the wider economy. The appointment means I am the voice of the industry in efforts to grow interregional trade in sub-Saharan Africa markets and influence automotive policy.
I am convinced our work to enter new markets for future growth and strengthening our base at home will lead to greater prosperity for our country. The automotive industry is growing in importance and its contribution to South Africa’s GDP is forecast to rise to 10 percent by 2020. That is a motivating force in our industry and an outcome we look forward to in what has been dubbed the African Century.
* Mike Whitfield is managing director of Nissan South Africa and was recently elected to a one-year term as president of Naamsa and deputy president of AAAM (Association of African Automobile Manufacturers).
** The views expressed here do not necessarily reflect those of Independent Media.
BUSINESS REPORT