The depth in components production capacity in South Africa’s automotive sector must be ratcheted up, and ways of attracting wider automotive value chain activities, as seen in competitor economies, need to be found, says the National Association of Automotive Component and Allied Manufacturers of South Africa (Naacam) executive director Renai Moothilal.
“From a production point of view, the economic conditions over the last few years have resulted in consolidation and efficiency seeking in the production and purchasing models of original-equipment manufacturers globally. This has led to a commodification of many component subsegments, where increased cost pressures are passed on, and these are typically of the type currently produced or localised in South Africa,” he notes.
Moothilal says that getting more unit-type plants in South Africa, such as for transmission or engine assembly, will be hugely beneficial in terms of spin-offs for local subcomponents suppliers.
He explains that an increased emphasis on regional industrialisation throughout Africa will open opportunities for the supply of South Africa-based components and subassembly enterprise.
Moothilal, moreover, highlights that the country has seen some growth into newer types of technology and processes such as aluminium skin panels.
“Mercedes-Benz South Africa is getting newer lightweight aluminium skin panels localised through Naacam member MA Automotive. This on its own creates a significant opportunity to deepen the aluminium value chain in the country,” he explains.
The Mercedes-Benz C-Class was the first aluminium-bodied car introduced into South Africa in 2014. The body shell of the C-Class reportedly weighs less, owing to its aluminium shell inducing a drop in fuel consumption of up to 20% with no loss of power.
Aluminium Federation of South Africa executive director Mark Krieg says aluminium use has been growing year-on-year in almost all sectors.
“There is enormous growth potential within the aluminium industry emanating from the automotive sector,” Krieg remarks.
However, he highlights that aluminium growth in South Africa is reliant on an increase in locally manufactured components.
“Existing manufacturers will benefit from the growth and significant investments will be required. This will lead to transformation and job creation on a substantial scale. Doubling production and jobs are both possible and with that comes greater contribution to the country’s gross domestic product,” Krieg concludes.