In an interview with KAYA FM, NAACAM Executive Director Renai Moothilal, said SA’s vibrant automotive manufacturing industry is a large and diverse environment where component manufacturers are contributing to the sector and wider economy with value added investment, employment, and new business opportunities.
“In terms of investment, last year alone, local automotive component manufacturers contributed more than R4 billion in high-quality investments resulting in significant technology transfer and skills development. Component production in SA is a key make-up of our industry,” he said.
Discussing the importance of AGOA for the sector, he indicated that SA, as a consumer market, does not currently offer sufficient vehicle demand to maintain and grow levels of vehicle production. “The export markets are a crucial source of demand for SA-produced vehicles and components. The US is a key market, and the strength of this trade relationship is anchored through AGOA. To put this into context, between 2001 and the current time we have seen a 500% increase in automotive product exports from SA into the US markets. This is across a range of both fully assembled vehicles and different types of direct component exports.” He added that “just last year alone, component exports into the US were close to R8-billion, representing about 15% of total global component exports. In this respect, NAACAM is fully behind the SA government’s efforts to ensure not only that AGOA continues but that SA’s participation is secured.”
Questioned on the worst case scenario should AGOA not be extended, Renai indicated that the direct export of components to the US as well as certain vehicle exports will be the hardest hit. This will necessarily impact component manufacturers supply components locally to these vehicle platforms. The reality is that losing markets like the US will have a domino effect on sector business overall. The component industry employs well over 80,000 people and over time it can be expected that many of those jobs could be affected should SA be excluded from AGOA.
Commenting more generally on the industry’s outlook, Renai said that the next six to 12 months will likely continue to be challenging. “For the year to date, production has been lower compared to what was initially projected, and there have been volume reductions by some local large exporters into the EU.” He did, however, highlight that there are positives that should be leveraged including stability in industrial policies in line with the SA Autos Masterplan and the operationalization of the NEV White Paper released at the end of last year. These are the positives that we should look to leverage while addressing and tweaking for the important issues,” he concluded.
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