The Eastern Cape is making progress with its “supermarket” for car parts, aimed at getting vehicle makers to substitute imported components with locally made parts. Currently, only 39% of all components used in vehicle production are locally sourced.
Government wants the industry – which is mainly based in the Eastern Cape – to cut its reliance on imports to bolster the local economy.
Recently, the Automotive Industrial Development Centre in the Eastern Cape (AIDCEC) – which is part of the Eastern Cape Development Corporation, and mostly funded by the provincial government – launched an online catalogue which lists currently imported components primed for local production.
So far, the AIDCEC has confirmed that 15 viable bids had been received to produce 25% of the components listed in the catalogue. The parts that may now be manufactured in South Africa include specialised antenna connectors, electrical motors, coils springs and slip yoke assemblies.
The aim is to have 60% of all components which are currently imported to be part of the local production line. The AIDCEC estimates that this will bring a R68 billion boost to the economy, while creating an additional 49 000 jobs.
It is offering training and financing opportunities for potential suppliers. “Many of the (vehicle) parts require a high level of technical expertise and successful suppliers need to comply with stringent international quality standards. We understand these real and valid barriers to entry and will work with qualifying suppliers to equip them to enter the supply chain, including access to finance,” explained the AIDCEC.
The hope is that a switch to more locally produced parts may lower the cost of vehicles for the price-sensitive local market, giving it a much-needed boost in a difficult time. So far this year, vehicle sales had fallen by a third as cash-strapped buyers turn to the pre-owned market.
It may also help the competitiveness of South African exports, which reached record levels last year, and contributes more than 6% of the country’s GDP. This year has been tough going, with the pandemic hitting demand for vehicles. Naamsa CEO Mike Mabasa now expects that exports will be 25% lower this year. Europe’s return to hard lockdown will be especially hard on the automotive industry as the region traditionally accounts for 52% of South Africa’s export market.
By Luke Daniel