NAACAM executive director Roger Pitot says local automotive component makers have been severely affected by the slowdown in South Africa’s vehicle production and that consumers will ultimately pay the price for the decline.

During 2005, 41 400 passenger and light commercial vehicles were produced on average every month, growing to 46 100 units in 2006, but declining by 11 per cent to 41 500 units per month in 2007.

"This has been a rather disappointing development for local automotive component manufacturers, who are consequently experiencing lower production levels due to this overall industry decline," Roger Pitot, executive director of the National Association of Automobile Component and Allied Manufacturers of South Africa (NAACAM), said recently.

"Production of passenger and light commercial vehicles are back to the same levels experienced during 2005, and the growth accumulated during 2006 has subsequently been lost," said Pitot. "This is mainly due to the decline in vehicle sales during the first half of 2007, the increased market share of imported vehicles, as well as relatively flat vehicle exports compared to 2006."

South Africa is importing more vehicles every year, a trend that concerns local automotive component manufacturers, particularly since it is not being matched by increased exports. In 2005, less than half of new cars sold in South Africa were imported, but the figure has since grown to almost 60 per cent in 2007.

"An increase in production normally results in enhanced economies of scale, lowering manufacturers' costs and making vehicles more affordable in the long run. At the same time, more jobs in the vehicle assemblers are created, and this flows down the supply chain to component manufacturers.

“We have noted a small decline in employment already this year, related no doubt to the lower production", he added.

NAACAM believes that component makers need to increasingly look to overseas markets to find fresh opportunities for export contracts, especially to other developing countries. The organisation recently initiated a trade mission to Brazil, which has a vehicle market that is four times the size of South Africa's.

"South African automotive exports to Brazil amounted to R245 million in 2006, a mere 0,5 per cent of the total worldwide automotive exports to that country. Our aim would be to double that figure within the next three years and we’re planning follow-up visits to Brazil for our members in the months to come," said Pitot.

In order to exploit additional export opportunities worldwide, NAACAM members will also be exhibiting at or attending numerous international exhibitions over the next six months, including the China International Auto Parts Expo, Equip Auto in France and the Auto Expo in New Delhi, India.

There is some light on the horizon, noted Pitot, as he hoped that the situation would improve to some extent when the new Mercedes-Benz C-Class and Toyota Corolla models enter into full local production by the end of the year.

"We do believe that 2008 will be a better year, but a lot will depend on overall sales - whether they will continue to decline or begin to grow again - and of course the impact that new imported entrants into the market will have, particularly those from China," he concluded.