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.”