Built-up imports now account for around 25% of car sales
TOMORROW'S BUSINESS demands lean support functions, low-cost and fast logistical support, optimum sourcing of components and flexibility to respond to customer needs as quickly as overseas plants, says Delta managing director Willie van Wyk.
Speaking at the unveiling of the Corsa GSI, van Wyk said one of the many challenges facing the South African industry was simple survival in the face of "enormous surplus capacity world-wide.
"A study by Britain's Economic Intelligence unit found that of world-wide assembly capacity of 77 million vehicles, only 44 million were being assembled.
"To put us in perspective - our 1998 total sales of 31500 units constitutes less than 1% of the world's unutilised capacity!" he said.
The weak rand has protected locally manufactured components to some extent.
"If the Rand continues its downward spiral, a CKD pack will virtually have doubled in cost over the ten year 1994 through 2004.
"Coinciding with this, the government has set forth with renewed vigour to impose a regime that will develop the industry, rather than protect it as in previous years.
"Ultimately, it wants to lower the cost of vehicles to the consumer, increase employment stability and reduce build complexity through businesses that are globally competitive.
"Never mind that we lack volumes that are not remotely globally competitive - this problem will be solved by simply opening the economy with competitive pressure doing the rest."
The industry has risen to the challenge.
"We have seen phenomenal growth in exports of both components and vehicles over the past five years.
"I would confidently predict that this year's outlook of R13-billion will at least be doubled over the next five years - a forecast that takes into account that industry lead-times are long and that we are still in the initial stages of the programme."
Despite the weak rand imports are taking an increasing share of the market.
Built-up imports now account for around 25% of car sales and this figure can exceed 35% in five years' time, he says.
"Another perspective - this year there are 40 carlines still being assembled in Southern Africa, versus 80 imported models."
Despite the challenges, Van Wyk does not expect any manufacturer to shut up shop just yet.
"No existing OEM is easily going to give up his position. SA's position on the continent is far too important and sooner, rather than later, the African renaissance will happen."
Instead they will look for efficient, focused business processes, with emphasis on total teamwork.
"Tomorrow's business demands optimum utilisation, best practice plant lay-outs, best machinery and equipment and efficient materials handling processes."
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