Motor sector key to GDP growth

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South Africa’s motor industry has the enormous potential to revitalise the South African economy and the outlook for this manufacturing sector is expected to have a positive knock-on , Picture: Getty Images

South Africa’s motor industry has the enormous potential to revitalise the South African economy and the outlook for this manufacturing sector is expected to have a positive knock-on effect on the country’s container trade this year, experts have said.

Another factor which can contribute going forward is for the Competition Commission to look into the matter in its totality. Especially on companies involved in price fixing to clear the field for first time buyers to be in the position to purchase new cars, which in turn, will uplift new vehicle sales growth.

This followed the latest scandal “uncovered” by the Competition Commission last week. It alleged a Japanese company was involved in price fixing. And industry experts believe that if this is rooted out of the system it could deliver economic benefits and create jobs in the manufacturing chain. Tembinkosi Bonakele, the commissioner of the Competition Commission, said for the industry to grow, the issue of price fixing would have to be dealt with as this derailed economic growth.

Almost all top car makers in South Africa which include BMW, Ford, Volkswagen, Mercedes-Benz, Nissan, GM and Toyota including Beijing Automobile International Corporation (BAQIC) have made an investment of R20bn combined this year. Research conducted by Econometrix, showed that the motoring industry had contributed 7.2% (or R256.7bn) to GDP in 2015.

Manufacturing contributed 4.4% and experts believe that more could be done if the government continues to expand its automotive incentives scheme of 2015 designed to grow and develop the sector through investment in new or replacement models. Dave Everett from global key accounts at Safmarine, a member of the Maersk Group, said a strengthened rand had helped in some way to contain new vehicle prices.

“A number of factors bode well for South Africa’s motor industry, the country’s largest manufacturing sector in 2017. Some car manufacturers in South Africa export up to 70% of their vehicles and components, mainly to Europe and other parts of Africa, which helps to maintain production growth and boosting the country’s GDP growth,” Everett said.

He said based on January’s figures and economic conditions exports, particularly to Europe, can be expected to remain strong. Everett said that the R11bn BAIC plant planned for Coega, Eastern Cape, would further boost South Africa’s container trade activity.

-Sello Rabothata|sellor@thenewage.co.za 

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