While still on the road to recovery following the global recession, the automotive industry is looking to the future as a time of exciting change.
At a recent GIBS Forum, Driving Change in the Automotive Industry, representatives of some of the leading global motor manufacturers spoke about the opportunities in the industry.
Dean Stoneley, vice president of marketing, sales and service for the Ford Motor Company of Southern Africa said, “The last five years have been a rollercoaster, it was a very challenging time. Now is the time for the industry to get back to core brands and focus on what we are good at.
“2009 was a year of recovery. 2011 and the years that lie ahead are the years of possibility.”
In a sector driven constantly by change, car manufacturers must continue to respond to economic challenges and innovate, constantly anticipating customer demands.
Dr Martin Zimmermann, CEO of Mercedes Benz South Africa, said it is imperative for automotive manufacturers to create and develop cars to give customers a choice of brands to suit their lifestyle needs.
“We are constantly improving our processes to enable us to bring cars to the market faster and be more responsive to customer needs. We need to have a sense of what will be happening in two to three years’ time, as we can then dramatically change what we will have to offer the market.”
“The reality is that we are competing with other factories in the world. We need to ensure we remain viable and efficient. “
All panellists agreed that in the future, customers will demand cars that offer green technology and significantly improved fuel efficiency.
Green technology and the price of oil are changing the nature of the car and new solutions must be found for different countries and markets. Manufacturers have an obligation, as well as the means, to provide green technology to their customers.
Stoneley said he believes the search for green technology is here to stay: “While the price of oil is volatile at present, we do see it increasing in the future and the science around global warming is sound. There is a definite shift in the market place and consumer mindset towards green.
He went on to say that Ford is investing money in both hybrids and electric vehicles and exploring different technologies.
Manny De Canha, CEO of Associated Motor Holdings, said motor manufacturers are likely to offer a two-pronged approach to customers wanting green technology – highly fuel-efficient cars for markets such as South Africa and hybrid or fully electric cars for smaller countries such as those in Europe which can afford to upgrade their infrastructure. The cost of developing green transport infrastructure, such as plug points for fully electric cars, will be prohibitive for many developing nations.
Zimmermann said he believes recently introduced improved transport infrastructure like the Gautrain won’t have an effect on new car sales. On the contrary, he said that if South Africa invests more in all kinds of infrastructure the industry will sell even more cars as it will grow the economy as a whole, as well as allowing for a more flexible transport system.
Zimmermann was also positive about the growth of the premium end of the car market: “In developing countries people will go from being able to afford just a car, to being able to afford a better car.”
However, De Canha said that at present, new car sales growth had stagnated and will continue to do so without job creation and increased disposable income.
New vehicle sales in South Africa rose 11,1% in August 2011 to 51 436 units compared to last year, according to figures from the National Association of Automobile Manufacturers of South Africa (Naamsa) released earlier this month. For the first eight months of 2011 new vehicle sales increased 14,5% compared to the same period in 2010. However, the figures represented the lowest monthly improvement in the past 19 months, reflecting a decline in the growth momentum of the new car sales cycle.
The ability to create jobs through automotive manufacturing is key to growing the country’s economy.
Panellists spoke about the fact that South Africa is competing on a global level against factories in other countries, such as Brazil and Thailand. In order to remain a viable investment destination, productivity levels need to be able to compete with these and more efficient countries.
Bodo Donauer, MD of BMW South Africa, said that in manufacturing terms, the company’s plants in Eastern Europe were more competitive than those in South Africa. While wages are comparable, plants overseas have much higher productivity levels.
Stoneley said Ford sees South Africa as a key strategic market; however, the competitiveness of the country when compared with other markets is a challenge: “South Africa has been slow to embrace globalisation and is a bit behind the curve. The reality is that we are competing with other factories in the world. We need to ensure we remain viable and efficient.
“It is important to create jobs and growth as part of a virtuous circle – as this will help us to sell more products in the long-term.
“There are challenges in South Africa,” he concluded. “But there are challenges everywhere. And the opportunities here are exciting.”