The country's automotive supplier association, Naacam, says its concerned about the impact that General Motors' disinvestment will have on its members over the short term.
Naacam executive director, Renai Moothilal, said many suppliers, including many in the Eastern Cape, at present depend on supplying components to General Motors for the Chevrolet line.
He said they're expecting a negative impact with job losses associated with this in the component supply chain.
However, Moothilal says over the medium to long term they are looking at the take-over of GM operations in South Africa by Isuzu of Japan as positive.
"It's not ideal to be losing an assembler of OEM. However, we do think that the announcement by Isuzu to take over the manufacturing plant is a positive move and we believe that there should be an increase in the volume of Isuzu products that are assembled out that plant, purely because we don't see any reason why Isuzu would have invested in a manufacturing plant if they did not have plans do significant volumes," said Moothilal.
Meanwhile, Moothilal said automotive component suppliers have been urged to implement innovative growth strategies in the short to medium term.
He said this was one of the key recommendations by specialist bench-marking consultancy, B&M analysts which completed a bench-marking research survey which included comparators from Hungary, India, Mexico, Thailand, the UK and the USA.
“The report shows that such strategies included pursuing increased value addition of products through forward or backward vertical integration; re-assessing the fit between local manufacturing capabilities and technology with the combination of domestic demand and targeted export markets; as well as securing contracts linked to large scale export platforms”, Moothilal added.
He said in a statement that these leading companies were also growing by investing for the future. Investments made in product and process technologies have been central to enabling new business opportunities. Moothilal lauded the vital role that government support programmes such as the DTI's Automotive Investment Scheme (AIS) and the wider Automotive Production Development Programme (APDP) had in driving such investment.
He said the South African Automotive Supplier Performance Report 2017 is part of NAACAM’s effort to keep its membership appraised of industry trends and empirically assessed performance information.
At the recently held NAACAM Show, President Dave Coffey mentioned that regular and measured checks of the component manufacturing sector was key to “help unlock blind-spots and at the same time allow stakeholders, including the public, to have a sense of what’s happening in the automotive supply chain”. NAACAM will also be releasing a quarterly snapshot report to reflect on key competitiveness metrics like domestic localisation rates, employment as well as a range of quality and productivity metrics from the second half of 2016.
The automotive sector remains one of the priority manufacturing sectors in SA. The sector contributed 7.4% to SA’s GDP in 2016. It is commonly known that the largest economic spin-offs in any automotive sector lies in its base of component production.
