Auto industry upbeat about prospects for 2010/11

While Europe, Australia
and the Far East were
worst affected by the drop
in volumes for automotive
exports, the USA was not as
severely affected, according
to Safmarine’s automotive
expert Rob Lord.
“This because the US
market for South African
auto exports was, to some
extent, sheltered from the
downturn.” The total of South
African FBU (fully-built up)
exports for 2009 was down
38.4% whereas for the US
market the drop was 25.1% .
However, Lord is upbeat
about the prospects for 2010
and 2011.
“Although sales of new
cars are likely to remain
fairly flat, significant
investment is being made
in new projects which will
have a positive impact on the
market. Everyone is hoping
for growth but growth will, of
course, depend on pricing.”
Freight rates were severely
pressurised throughout
2009 and Lord expects
the pressure to continue
as OEMs look to achieve
savings in ocean freight,
which currently accounts for
a large percentage of their
procurement budget because
of the high level of imports.
And improved
infrastructure will play
a role.
“Automotive cargo is
particularly time-sensitive.
There is an enormous cost
associated with diverting
ships when ports are
congested and OEMs need
to hold extra stock to
accommodate delays in the
transport chain (so as not to
affect production).
“The present high level of
investments being made in
key infrastructure – ports,
road and rail – will have a
positive effect on the industry
because it will help the
entire industry become more
globally competitive.”