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Munich - Car manufacturer BMW said on Tuesday it is concerned about the declining competitiveness of the South African automotive component industry.
Herbert Diess, board member at BMW Group responsible for purchasing, said this to Fin24 at the BMW Annual Accounts Conference.
BMW South Africa's plant in Rosslyn outside Pretoria produced 46 240 vehicles in 2010; the group sold about 9 600 of these locally and exported the remainder - chiefly to the United States and Japan.
The local content in South African-produced BMWs is 53%.
The automotive industry has set a target of 70% for South African car makers. BMW SA does not expect to meet this target in the foreseeable future.
"We have seen a deteriorating level of competitiveness in South African component makers," said Diess.
He added that the biggest problem is the level of wage increases of local workers, which is higher than competitive locations in Asia and Eastern Europe.
BMW sources items including leather trims, interior components and wiring harnesses from South Africa.
Diess said that BMW SA is considering moving aspects of its leather operations to Botswana.
He said he hopes that the government's automotive production and development industrial plan (APDP), which comes into effect in the next two years, will boost competitiveness as it incorporates incentives for suppliers.
South Africa should manage strikes better, Diess said.
"The auto industry strikes in South Africa last year actually interrupted production in our German plant," said Diess. "This is not acceptable."
Despite labour and supplier issues, BMW Group remains committed to the South African market and its local factory.
- Fin24
Herbert Diess, board member at BMW Group responsible for purchasing, said this to Fin24 at the BMW Annual Accounts Conference.
BMW South Africa's plant in Rosslyn outside Pretoria produced 46 240 vehicles in 2010; the group sold about 9 600 of these locally and exported the remainder - chiefly to the United States and Japan.
The local content in South African-produced BMWs is 53%.
The automotive industry has set a target of 70% for South African car makers. BMW SA does not expect to meet this target in the foreseeable future.
"We have seen a deteriorating level of competitiveness in South African component makers," said Diess.
He added that the biggest problem is the level of wage increases of local workers, which is higher than competitive locations in Asia and Eastern Europe.
BMW sources items including leather trims, interior components and wiring harnesses from South Africa.
Diess said that BMW SA is considering moving aspects of its leather operations to Botswana.
He said he hopes that the government's automotive production and development industrial plan (APDP), which comes into effect in the next two years, will boost competitiveness as it incorporates incentives for suppliers.
South Africa should manage strikes better, Diess said.
"The auto industry strikes in South Africa last year actually interrupted production in our German plant," said Diess. "This is not acceptable."
Despite labour and supplier issues, BMW Group remains committed to the South African market and its local factory.
- Fin24
