South Africa’s automotive-manufacturing industry has the potential to boost production by almost 50% to at least 900 000 vehicles a year by 2020, if the government maintains stable and supportive policies and the sector avoids labour disruptions, according to the local producers’ group.
“It’s feasible,” National Association of Automobile Manufacturers of South Africa director Nico Vermeulen said in an interview in Johannesburg. “We’ve factored into that estimate or target the possibility of new entrants coming into this market.”
The industry is one of the few growth sectors in an economy expanding at the slowest pace since a recession in 2009. South Africa’s government auto-incentive programme has attracted companies including Toyota Motor Corporation, Ford Motor Company and BMW to set up and invest in factories. The growth in investment and output is primarily driven by export demand, with shipments seen reaching 375 000 vehicles this year.
Naamsa predicts production will increase to 682 000 vehicles in 2017 from about 616 000 last year, Vermeulen said in an earlier speech. A planned investment by China’s Beijing Automotive International Corporation, which will build a manufacturing plant in the southern coast city of Port Elizabeth, will help bolster production, he said.
South Africa should also review vehicle taxes, improve fuel quality and consider incentives for hybrid and electric vehicles, Vermeulen said.
© 2016 Bloomberg