The Department of Trade and Industry is looking to designate specific vehicles, starting with buses, for procurement by state agencies to raise domestic production and employment. This was stated by the departmental minister Rob Davies, speaking at the official opening of the Johannesburg International Motor Show at Expo Centre, Nasrec, last night (Monday, 10 October).
Davies reiterated that the designation of products is part of a government plan to leverage sales of locally-manufactured goods by state agencies. The new preferential procurement regulations will come into effect on December 7, 201l.
He said that in terms of the motor industry the first step would be to designate buses and he added that other categories of vehicles could be designated in the future.
“The South African automotive industry – manufacturing and retail – contributes at least 6% to the country’s Gross Domestic Product (GDP) and the sector’s exports constitute almost 12% of total exports,” explained Minister Davies.
He continued by saying that this strong industry position had been made possible by support from government, mainly under the Motor Industry Development Programme (MIDP), which would be replaced at the beginning of 2013 by the new Automotive Production and Development Programme (APDP) .
Investment under the MIDP in 2011 totalled R4-billion and the cumulative investment under this scheme since 2000 was R32-billion.
An estimated 90 000 people are currently employed directly in automotive manufacturing – vehicles and components – despite 20 000 jobs having been lost due to the economic downturn of 2008, while a further 200 000 are employed in the retail and aftermarket sectors, said the DTI Minister.
The key objectives of the new APDP includes stimulating expansion of the automotive manufacturing industry to produce 1,2-million vehicles per annum by 2020, with the associated deepening of the component industry and to make a positive contribution to the balance of trade.
According to the minister South Africa was largely immune to the recent global economic crisis which resulted in the collapse of vehicle sales and big job losses in certain countries; the existence of some of the major international automotive producers was even threatened.
Speaking at the same function the President of the National Association of Automobile Manufacturers of South Africa (NAAMSA), David Powels, who is also President and CEO of the Volkswagen Group in SA, said that the 2011 Johannesburg International Motor Show was taking place during an immensely challenging time in the global economy and it would be naïve to believe that South Africa is distanced from the global economic woes.
“On a retail level the challenge is to ensure ongoing dealer viability while satisfying ever increasing customer service expectations,” said Powels.
“From a manufacturing perspective the challenge is to continue to provide a range of products that meets the expectations of a rapidly changing world where operating efficiency, driven by a massive increase in the price of energy and concern for the environment, are impacting to accelerate the adoption of new automotive technologies.
“The Johannesburg Motor Show, which takes the form this year of an automotive lifestyle event, offers the South African consumer a unique insight into the automotive future with many of our exhibitors taking the opportunity to showcase new technologies that are either production ready or at an advanced stage of development,” continued the president of NAAMSA.
He added that the South African motor industry will illustrate to the world the way in which it has restructured and aligned itself to the complex challenges facing the global motor industry around the world.
“The South African motor Industry is also emerging out of an extremely tough business environment in which it has been forced to re-examine the prevalent business model to ensure global competitiveness in the years ahead. Together with our partners in the component industry, major focus has been placed upon localisation of component manufacture.
“Significant investment on the part of the of the supplier industry has resulted in a much leaner, technologically capable and skilled component industry enabling the local automotive manufacturers to target key strategic global markets, resulting in a dramatic increase in exports of South African manufactured vehicles, to the extent that export volumes for 2011 are forecast to reach a record of about 300 000 vehicles.
“We are working closely with the Government to ensure that the new Automotive Production and Development Programme (APDP) which starts is 2013, takes the industry to new levels in the years ahead,” stressed Powels.
“The South African motor industry remains one of the most competitive in the world. It is intensely competitive and demanding with over 1 300 models and 61 marques competing for what is, in global terms, a relatively small market. The South African consumer justifiably demands an outstanding product and, equally, the highest levels of after sales service.
“The motor show will be used not only to showcase the South African motor industry and to project its global competitiveness but also to launch new products, technologies and services to a demanding, but highly involved consumer. The outlook for the South African domestic market remains relatively positive with steady growth being forecast in the medium term,” concluded the NAAMSA President.