South Africa’s automotive market is not insulated from the global economic churn and credit squeeze, PricewaterhouseCoopers said on Monday.
”The integrated nature of the global supply networks of multinational OEMs [original equipment manufacturers], and the continuing pressures to move manufacturing to low cost countries, have influenced decisions on what gets produced where in the world,” said Mike Rudman, PwC Automotive Partner.
This had led to the growth in Brazil, Russia, India and China and export contracts being placed in smaller emerging territories such as South Africa, Morocco, Iran, Vietnam and Eastern Europe.
”Inevitably, there must be an adverse overall impact arising from continued doldrums in demand from mature markets. Individual territories and regions stand to win or lose in this scenario based on global sourcing decisions,” he said.
With competitive cost, quality and reliability considerations as an absolute given, South African manufacturers needed all the support they could get in the current environment to influence these decisions.
According to the latest PricewaterhouseCoopers Global Automotive Perspectives 2008 report, increasing fuel costs, CO2 emission reductions, fluctuating exchange rates, shifts in consumer behaviour and a challenging economic climate were just some of the issues facing the automotive industry.
The report predicted that 2008 and 2009 held profound industrial shifts and challenges for the automotive industry. This comes as the industry responded to a fast growing array of commercial and regulatory pressures.
Said Philippe Vincent, partner at PricewaterhouseCoopers: ”Great opportunities exist for the automakers and suppliers who will be able to deliver solutions to this structural industry transformation.
”A clear challenge lies in the ability of Western automakers to adapt to the clear dichotomy existing between the established, mature markets and emerging markets.” – Sapa