Auto industry forum launched

Johannesburg - The department of public enterprises on Thursday announced the establishment of the state-owned Automotive Industry Competitiveness Forum.

The forum would help remove bottlenecks and improve the automotive industry's competitiveness.

Minister Malusi Gigaba made this announcement in Sandton after a meeting with representatives of the automotive industry, Transnet and Eskom.

The forum would not have statutory powers.

"The department of public enterprise will play a facilitating role. We will ensure that we deal with the challenges that are faced by this sector," Gigaba said.

Government regarded the automotive sector as a strategic one, he said.

"It is important that we provide sufficient support in terms of capacity, efficiency and ensure that... energy and logistics make the sector productive and competitive," said Gigaba.

He said the establishment of the forum would communicate the right message about strategic partnerships between government and the private sector.

"What we intend to do is to ensure that we assist the sector become competitive so that we are able to attract more work packages and create jobs in South Africa.

Gigaba said among the issues to be addressed by the forum were energy efficiency in the automotive industry and support of the programmes that Eskom was already implementing.

"The technical teams are going to start working to firm-up the draft terms of reference that have been presented... and to develop more strategic long-term issues that will be implemented over the medium to long-term period."

A meeting to review this process would be held in December.

The automotive sector has set out a target to grow its manufacturing in South Africa from 600 000 vehicles a year to 1.2 million vehicles by 2020.

David Powels, president of the National Association of Automobile Manufacturers of SA (Naamsa), said the forum would help the market grow as the South African economy was starting to pick up.

He said the automotive sector needed to grow quickly before the country's economy starts growing economically.

When Powels was asked about how the sector would grow in the midst of high levels of indebtedness he said: "There are enough customers that can afford cars and able to pay to enable the market to grow."

Powels said one of the strategic objectives of the forum would be to move the transportation of vehicles off the road onto rail.

He said there were more people in the South Africa who were moving into the target market of buying cars and that would remain for the next five to 20 years.

"On our doorstep we have Sub-Saharan Africa and within Sub-Saharan Africa there are five or six economies that are growing at exponential rate.

"Those markets are also advantages that we have for our automotive industry," Powels said.

*Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.