Productivity, jobs rise in SA motor sector

Productivity in the South African motor manufacturing industry had improved considerably from 10.2 vehicles produced a year per worker in 1999 to 14.4 vehicles last year, the National Association of Automobile Manufacturers of SA (Naamsa) said this week.

“Skilled personnel represent a critical element in promoting global competitiveness, and improvements in domestic productivity efficiencies have come mainly as result of higher specialisation and economies of scale benefits via production volume increases in exports as well as increased levels of automation,” according to Naamsa’s annual report.

Employment levels in the vehicle manufacturing sector have also increased significantly from the middle of last year to date and totalled 34 604 by the end of September this year, which was the highest industry employment level in the past seven years.

Total industry sales, including those not reported to Naamsa, were expected to exceed 610 000 units this year. The report said this was an impressive improvement of 26 percent and more than 124 000 vehicles on last year’s all-time record of 481 520 units.

Domestic revenue, including VAT, rose to R76.4 billion last year from R59.4 billion in 2003, principally due to the higher new vehicle sales volumes.

New vehicle prices last year were relatively stable, with average year-on-year increases coming in below 1 percent.

Imports of light vehicles, which comprise cars and light commercial vehicles, increased to 28.3 percent of total new vehicle sales in 2004 compared with 22 percent in 2003.

The report said that under the motor industry development programme (MIDP), the composition of the local vehicle parc was changing.

“In 1995, consumers had a choice of 250 model variants. By 2004, this had increased to over 1 100 model variants,” it said.

“This trend is consistent with one of the aims of the MIDP, namely to encourage domestic companies to specialise in high-volume model production, achieve economies of scale benefits, export competitively and import low-volume requirements.”

The report revealed that the industry’s negative trade balance widened to 18.8 percent from 9.1 percent in 2003 primarily due to the strong rand and the relatively high local economic growth.

“The strength in the exchange rate rendered imports more cost competitive and encouraged the importation of built-up vehicles, while the record demand for vehicles in the domestic market translated into higher levels of imports of original equipment components used in the production of motor vehicles.

“At the same time, the strength of the rand impacted negatively on exports of components, including original equipment and aftermarket components as well as exports of vehicles.”

At a glance

Net profit before tax of car and light commercial vehicle production rose to R5.87 billion last year from R4.26 billion in 2003.

Total capital expenditure by the new vehicle manufacturing industry is projected to rise to R5.9 billion this year from R2.2 billion last year.

Industry capital expenditure is projected to grow by R15 billion over the next five years.

Average monthly employment levels by the motor industry, including the tyre industry and motor trade, distribution and servicing, totalled 312 825 at the end of June this year compared with 306 300 at the end of last year.

South Africa exported vehicles to 52 countries around the world last year, of which 24 were outside Africa.

Total vehicle exports were projected to total 143 400 units this year compared with 110 507 units last year.

Source: Naamsa