Good news for SA auto component manufacturers

02 July 2018 | Web Article Number: ME201810409

Commerce & Trade
SMME Development & Support
Good news for SA auto component manufacturers

LOCALISATION opportunities should increasingly become evident for South African-based automotive suppliers.

This is one of the key findings contained in the South African Automotive Supplier Industry Benchmark Report 2018 and follows closely on the news that Durban has been selected as the host city for the 2019 National Association of Automotive Component and Allied Manufacturers (NAACAM) Show.

The report, produced for NAACAM, is based on research undertaken by B&M Analysts, a specialist benchmarking consultancy, and based on their comprehensive benchmarking activities in the automotive sector. The report contains benchmark data for South Africa-based suppliers, as well as comparators from developed and less developed countries.

NAACAM executive director Renai Moothilal said the findings “confirm that the local OEMs are wanting to increase their purchases from South Africa suppliers”.

Moothilal added that, “Three-quarters of the SA OEM customer respondents engaged with in 2017, indicated that they are looking at increasing their total buy from current local suppliers in coming years. This is related to purchasing more of the same products and expanding the range of products bought from suppliers, and even around increasing the buy of newly developed products from local suppliers”.

“This seems to be a step change in the way localisation has been viewed and is possibly reflective of OEMs starting to plan for a future production environment that rewards higher localisation”

The report outlines steps suppliers can take to unlock these opportunities. It found that local suppliers need to focus attention on better meeting customer product development demands. To achieve this, local suppliers need to ensure an improved understanding of customer development needs as well as what skills and supporting capital and technology is required to realise increased growth opportunities from the local OEM customers.

In addition, suppliers need to look at influencing and situating the development needs of local customers within their research and development networks whether globally located or not.

Moothilal reflected on the important role that government’s support programmes, especially the DTI’s Automotive Production Development Programme (APDP) and its associated cash grant, the Automotive Investment Scheme (AIS), is playing in supporting the industry’s localisation drive.

The soon to be announced post 2020 automotive policy is expected to have a heightened focus on localisation in the sector, with work done to date having highlighted the importance of shifting the current localisation average in SA of less than 40% to 60% by 2035.

Moothilal added that, “the automotive sector remains a priority South African manufacturing sector, contributing significantly to the country’s GDP and export basket. Whilst the production of the local OEMs is crucial, the largest economic spinoffs will be realised in the supply chain”.

Localisation and related issues will feature prominently on the agenda of the 2019 NAACAM show in Durban.

The association recently announced that the show would take place at the Durban International Convention Centre (ICC) from 12 to 14 March 2019 and be hosted by the eThekwini Municipality in partnership with the Durban Automotive Cluster (DAC).

The inaugural NAACAM Show in April 2017 was also held at the Durban ICC and saw 1 304 delegates participate in a two-day conference and exhibition. Delegates engaged with 46 speakers on nine conference themes, including manufacturing best practice; black supplier development and transformation; the future of the automobile; and the South African Automotive Masterplan.

The NAACAM Show 2017 exhibition saw 183 automotive component manufacturers, government and support service agencies present their offerings to delegates and key automotive stakeholders – this included the profiling of 38 black-owned suppliers

According to the association, a highlight of the 2017 show was the facilitation of 122 pre-arranged buyer-supplier linkage meetings. “Delegate feedback in 2017 was incredibly positive, with 60% of respondents agreeing that it is likely that new business will be secured in the future, based on their NAACAM Show participation,” the association said in a statement.

In 2019, with the support and endorsement of the Department of Trade and Industry, the Original Equipment Manufacturers (OEM) Purchasing Council, Automotive Supply Chain Competitiveness Initiative (ASCCI), as well as National Association of Automobile Manufacturers of South Africa (NAAMSA) and National Union of Metalworkers of South Africa (NUMSA), the NAACAM Show aims to be the premier automotive manufacturing growth, technology, transformation and stakeholder engagement forum in Africa.

More information can be found at

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