The Eastern Cape will launch a provincial automotive industry cluster in March, with the aim of improving and sustaining the competitiveness of the region as a vehicle manufacturing hub.
The Eastern Cape hosts several automotive component producers, as well as the Mercedes-Benz, General Motors and Volkswagen assembly plants.
The cluster will be a partnership between these assemblers, component suppliers, trade unions and government and will be tasked to drive appropriate programmes to address the challenges facing the sector in the province.
A three-day planning forum in January yielded an initial agenda for the cluster, and identified logistics, skills development, research and development, innovation, automotive tooling, as well as component supplier development and parts localisation as focus areas.
Key competitive challenges for the Eastern Cape relate primarily to the position of the South African automotive sector within the global auto value chain and its distance from key production sites and markets, says Eastern Cape economic development, environment and tourism MEC Mcebisi Jonas.
The Eastern Cape also remains on the periphery of the South African economy, he adds.
This shows in the province’s logistics system which has not sufficiently addressed connectivity of the region to the national economy and which continues to constrain local efforts to improve competitiveness, as well as attract local investment.
This connectivity is critical for the fortunes of the entire Eastern Cape economy – not only the automotive sector, says Jonas.
The reality is also that South Africa’s automotive sector currently operates outside of the key global automotive sector markets, accounting for just over 0.5% of global production volumes, he notes.
Local, regional and continental vehicle demand is currently also insufficient to create competitive economies of scale within the local automotive sector.
This is then also reflected in fairly low levels of local parts content relative to the major automotive economies in the world.
The local industry is also at a disadvantage in terms of cost competitiveness.
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