With this year’s National Association of Automotive Component and Allied Manufacturer (NAACAM) Show, driven by the Tshwane Economic Development Agency (TEDA) and held on August 30 and 31, having aimed to drive an understanding of the importance of the local automotive component manufacturing sector for the wider automotive industry and South African economy and manufacturing base, NAACAM CEO Renai Moothilal advises that the event has delivered on that mandate.

With strong exhibition representation from over 130 brands, most of which were local automotive component manufacturers, and attendance of original-equipment manufacturers (OEMs), industry service providers and key public and private sector stakeholders, the show provided an opportunity to showcase the depth and strength of the domestic automotive value chain, as well as highlight the host city, Tshwane, as an investment destination of choice for the sector.

He outlines that the local component sector employs over 80 000 people, is a conduit for transformation, particularly within the Tier 2 and Tier 3 space, and reached record export volumes in 2022 of more than R70-billion.

“This reflects direct component exports only, not the value of components exported within fully assembled vehicles.”

The importance of the sector was well captured by Trade, Industry and Competition Minister Ebrahim Patel during his address at the conference, when he stated that “it is the performance of component manufacturers and their contribution to the economy that is one of the most fundamental arguments for the incentives that South Africa offers the auto industry. Strip away the component manufacturers, and the economic argument for the Automotive Production and Development Programme (APDP) is weaker and poorer.”

This sentiment was further amplified with Moothilal announcing a consolidated “NAACAM Show 2023 Investment Pledge” from 16 exhibiting component manufacturers of R4.86-billion for 2023/24. This is associated with 10 700 jobs, maintained and new.

The NAACAM Show’s conference programme was curated around providing component manufacturers and industry stakeholders with insights and discussion forums regarding changes and emerging trends in the sector to support industrialist’s considerations and planning for the future.

Fifty-six speakers spoke to topics largely encapsulating current trends in the sector, including a transition to new energy vehicles (NEVs) and wider carbon regulations, as well as digitalisation and automation in factories.

Moothilal notes that key takeaways focused on how the automotive component manufacturing sector can support an NEV transition, adding that the sector is largely technology agnostic, and ready to support whichever vehicle propulsion models are produced.

“As with any model change, once component manufacturers have direction from their OEM customers, they will make the necessary investments. This is not to say that there are not sectors at risk,” he notes, adding that a portion of South Africa’s component exports do not have an application in a battery electric vehicle and are therefore facing declining demand from foreign markets amid the phasing out of internal combustion engine technologies.

He assures, however, that there are also significant localisation opportunities and the opportunity to develop African regional value chains, owing to neighbouring countries’ having significant raw material deposits that are required to manufacture NEVs.

He notes that local manufacturers do not need to single out a specific NEV technology, as there is scope to consider all NEV technologies. The local automotive sector is agile and flexible enough to accommodate new and innovative NEV technologies.

Additional Focus

Another topic that was emphasised on both days of the event was the importance of skills and the need to cultivate a skilled workforce in the local sector, with automation and advancing technologies being suggested as solutions to support workforce training.

“This should be considered in a developmental context, where automation does not result in job losses, but is rather a tool for upskilling the workforce,” cautions Moothilal.

Emphasis was also placed on promoting more women and black-owned industrialist participation in the sector, with Patel announcing the establishment of a fund providing component manufacturers – who are unable to meet broad-based black economic-empowerment Level 4 requirements – access to APDP.

Fund beneficiaries will be black industrialists, with targets in place for a percentage of those funded to be women-owned.

“While the sector is facing constant changes and disruptions, the way forward focuses on future-proofing the sector but also identifying pockets of opportunities and capitalising on those to drive the sector forward,” Moothilal assures.

He notes that NAACAM’s long-term aims are underpinned by the objectives of the South African Automotive Masterplan to 2035.

These aims include deepening localisation and growing South Africa’s manufacturing capabilities, as well as increasing the skill and technology levels prevalent in the sector and the participation of black-owned industrialists.

“As an industry association, our aim is to create an increasingly automotive component-friendly operating environment, driving investment and increased localisation and job creation. NAACAM would like to see a component sector which continues to be a significant contributor to the growth of the South African economy,” Moothilal concludes.