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According to the South African Automotive Supplier Industry Benchmark Report, South African vehicle components manufacturers are making significant gains in quality, productivity and cost competitiveness but still struggling to close the gap on emerging-market competitors. The research, commissioned by the National Association of Automotive Component and Allied Manufacturers (Naacam) and conducted by B&M Analysts, compared South Africa directly with other up-and-coming industries in India, Mexico and Hungary.

The report states that more than 60% of the value of parts built into locally-produced vehicles is imported. The low volumes suppliers are called on to produce makes it impossible for them to be cost-competitive with overseas suppliers that count production volumes in millions, rather than thousands, it found.

It also found that while there are plenty of domestic reasons for the components supply industry to grow, improving global competitiveness is often matched by that of other countries’ industries. When it comes to worker commitment, however, South Africa leads the countries surveyed.  A 3% absenteeism rate in South Africa is average, less than half that of the other countries. South African training budgets, as a percentage of remuneration, are ahead.

SA motor manufacturing lagging behind other developing countriesAccording to Douglas Comrie, MD of B&M Analysts, the local supply industry is making real progress, but some weaknesses require attention. “Lack of capital investment is a challenge. In South Africa, this is equivalent to 3.6% of annual sales, compared to 6.7% elsewhere. Not only is more investment needed to enable localisation growth but it could also support local research and development, which appears to be a low priority among suppliers,” he says.

The report backs this up, stating a lack of South Africa-specific local product development is a growth obstacle, according to the motor companies. “While complex and challenging, especially considering the structure of research and development networks, suppliers need to ensure an understanding of customer development needs and the resources needed to support them,” it states.

The vehicle manufacturers surveyed indicated that they plan to not only commit to long-term relationships with existing suppliers but also to increase their total level of local sourcing. This is backed by government policy, which is looking for local content in vehicles to increase from the current level of below 40% to at least 60%.

Image credit: https://bmanalysts.com/about/meet-the-team/douglas-comrie/

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