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Vehicle Industry In SA To Increase Production
May 03, 2007

Despite facing various some challenges, the South African motor industry has the ability to sell a million vehicles by the year 2010.

The motor industry in South Africa is anticipated to earn R230 Billion revenues this year (2006), as compared to R201.7 Billion last year. The revenue is likely to come from the projected overall sales of 714,500 vehicles, representing a growth of 15.7% over the previous year. An increase of 17% to make 614,470 units is foreseen in the locally manufactured vehicles towards the end of 2006.

Vehicle production is the 2nd largest industry and one of the most rapidly growing industries in SA's manufacturing sector. There has been around 9-fold growth in vehicle exports since 1994, and now it account for approximately 7% of the exports in the country.

SA's motor industry will sell a million vehicles by 2010, a dream believed to be achievable by many economists & analysts, in spite of the stiffening monetary cycle & recent estimates of slow growth in vehicles sales during the year 2007.

Car industry of South Africa was worst hit by an increase in the beginning of this year (2006) to 10% on European Union duties post moving out of blocs' generalized system of preferences, offering poor nations trade advantages. The duties will now return to 6.5% before they are phased out.

Success of SA auto industry has been mainly due to its integration in to global arena. But, the nation faces tough challenges from a number of other emerging countries for its share of automotive pie. Constraints on first-class service's delivery encompass critical model proliferation; challenges in parts supply; high levels of activity; and lack of physical & human capacity.

To enhance its vehicles' production, SA ought to reduce logistics costs in order to counter its geographical drawbacks. Increasing the productivity and improving the economies of scale will help the country in meeting global standards.

In spite of its relatively small size & production abilities, SA's auto industry gives several competitive benefits to global concerns. These encompass a world beating pricing ability on low-volume or short runs, competitive costs of tooling, and a high level of manufacturing flexibility.

"Buoyancy in SA's economy, innovative product launches, and increase in disposable incomes coupled with lucrative finance schemes from various automobile manufacturers as well as financial institutions are a few of the key drivers behind automobile industry's growth in SA", as per RNCOS analyst.

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