It has been predicted that a period of belt-tightening lies ahead for South Africa this year. While this may very well be the case, many recognise the cyclical nature of downswings and finding smarter strategies for sustainability and future growth. This period of intensive business challenges may also produce previously unforeseen opportunities and innovation.
There is very little doubt that the current economic situation in South Africa is having an impact on the automotive industry, with the National Association of Automobile Manufacturers of South Africa (NAAMSA) showing a major decline in sales. Whilst vehicle exports have also shown a decline, the industry remains positive that new car exports will remain on track which will help offset the country’s balance of payments. Used vehicle sales are also somewhat cyclical in nature and will likely show an increase through 2016 as consumers downgrade due to affordability issues.
“This period of intensive business challenges will produce opportunities which will start to blossom within the automotive industry in 2017,” says Glen Mollink, chief executive officer at Innovation Group South Africa. An improvement in GDP is a prerequisite. In light of the economic down turn the automotive industry is now switching its focus to smarter strategies for both streamlining costs and gaining and retaining customers in a service-centric environment.
Labour actions continue to be a main concern within the automotive industry and investors have cited that it has a major impact on the industry as it impacts upon continuity and profits for any given year. The report has pointed out that certain South African manufacturers have indicated that continued labour action will have huge impacts on their business in 2016.
Could the South African government provide more favourable conditions for the automotive industry? Mollink believes this could ease the pressure. He explains that, if the conditions could be improved for growth, it could lead to South Africa realising that there is massive potential to become an automotive business gateway to the rest of Africa.
Skills shortages have always been an issue in the South African market. Research from the report has shown that there is a shortage of skills to drive the growth of the automotive industry. Customer service is a section in the automotive industry that is hard hit by this skills shortage. Without the right people to train workforces, there is a real need to focus on upskilling workers throughout the industry.
“Skills and development are likely to remain a bone of contention well into 2016,” Mollink says, “We need to ensure that government and industry work together to identify these gaps and work on closing them before it’s too late.” A step in the right direction in overcoming this challenge is the work currently being done by The National Automobile Dealers Association (NADA) in engaging with the Department of Education and Training. This is a long term project/initiative but one which is set to have a positive impact on addressing the skills shortage. In the interim, businesses need to focus on the development of skills themselves to enable the industry’s future competitiveness.
While 2016 still looks to be filled with challenges when it comes to growth for the automotive industry, there is light at the end of the tunnel. With the right investment and upskilling of automotive workers, we will start to experience growth and progress. The majority of South Africans are still feeling the pinch of the 2008/9 recession, but with time and hard work, we will again feel the rewards of patience and persistence in the automotive industry.
