The International Organisation of Motor Vehicle Manufacturers (OICA) has published its recent findings that rank countries in terms of the strength and resilience of their automotive manufacturing industries. According to the survey, South Africa ranks seventh in the world. The study focused on post-pandemic recovery and sector growth.
The Covid-19 outbreak was a major setback; it affected every country surveyed and its global impact will be used as the benchmark for any disasters in the years to come. It was a defining moment of the modern era, so tracking industries in the wake of the outbreak offers a stable comparison.
Formex Industries is a leading manufacturer and supplier of automotive components, welded assemblies and tubular products in South Africa. We produce various products for local original equipment manufacturers (OEMs) and Tier 1 suppliers. The growth in the local automotive sector is a positive sign of collaboration and industry-wide efforts to improve.
Recent impacts on the global industry
In addition to the pandemic, the Russia-Ukraine war has taken its toll on automotive supply chains around the world. While South Africa is geographically far away from Europe, the local automotive sector has faced specific challenges as a result of the conflict. This, coupled with nationwide lockdowns and the recent scourge of load shedding, has certainly affected industry growth.
However, the country still ranked seventh in the world for recovery since 2020. South Africa’s automotive sector has shown a 12% improvement in manufacturing output, according to the OICA study. With major OEMs, such as Ford, Volkswagen, Mercedes-Benz and Toyota all investing heavily in South Africa, this growth is to be expected.
How other countries rank
According to the survey, Argentina has shown the largest recovery and growth since the pandemic with a 69% increase in output. The South American country manufactured just under 500 000 vehicles at the close of the survey, compared to 257 000 vehicles produced the year prior.
The next largest recovery has been shown by Indonesia, with 63%, despite putting out over one million vehicles a year. There is quite a large gap between Indonesia and the third-highest-ranking country, India, which showed a 30% recovery. Next are Kazakhstan, Morocco and Thailand.
South Africa came next with a 12% recovery and just shy of 500 000 vehicles produced. The country ranked higher than Brazil and Portugal. This study shows that there is still room for improvement in South Africa. Many of the major investments made by OEMs are now coming to fruition or have already resulted in facility upgrades and boosts in output.
One of the country’s major challenges is load shedding. It affects all facilities, suppliers and OEMs. As a result, many car brands have invested in solar energy to run their factories and assembly lines. These include Ford and Mercedes-Benz, both of which have recently completed solar energy upgrades at their manufacturing facilities.
Until load shedding is addressed seriously, South Africa is unlikely to improve its manufacturing output by much more than it currently is doing. The local automotive industry supports 100 000 livelihoods and is the country’s fifth largest exporting sector, accounting for 18.1% of total exports. As such, it’s a large contributor to the local gross domestic product (GDP).
As a key stakeholder within the automotive sector, Formex strives to mitigate challenges in the production process and supply chain. We aim to ensure that our customers receive world-class components and assemblies on time and in line with international standards. For more information about our components and products, please contact us today.
Formex Industries is a metal forming and assembly company that supplies a variety of complex products to the local automotive industry and the export market. The company is based in the Nelson Mandela Bay metropole, South Africa’s foremost region for automotive manufacturing and export.
Formex is a Level 2 B-BBEE supplier. The company is owned by Deneb Investments Limited – a subsidiary of Hosken Consolidated Investments Limited (HCI) – one of South Africa’s biggest true B-BBEE companies listed on the Johannesburg Stock Exchange (JSE).
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