The strength of the rand caused vehicle component exports to decrease last year, bringing to an end a seven–year period of sustained growth in the sector.

The strength of the rand caused vehicle component exports to decrease last year, bringing to an end a seven–year period of sustained growth in the sector.


According to data released by government agency Trade and Investment SA (Tisa), component exports dropped seven per cent last year to R21,3 billion from R22,9 billion in 2002.


The rate of growth in vehicle exports slowed to 1,1 per cent last year, but still added R19,5 billion to the GDP.


The downward trend was alarming, because the sector had become one of South Africa’s major foreign currency earners and contributed 5,7 per cent to the GDP, analysts said.


quoted National Association of Automotive Component and Allied Manufacturers (Naacam) head Clive Williams as saying said that the setback could cause long-term damage: "This is not a short-term problem. It will hurt us for the next five to 10 years".


Along with the negative effects of the strong rand, exporters were also being affected by the sluggish world economy and excess global car manufacturing estimated at about 35 per cent.


The industry was also consolidating after a long period of buoyant growth, said Gustav Meyer of Tisa. He added that the rand was much stronger against the euro and the dollar than it was three years ago when component exports increased by 47 per cent.


However, a recovery in the motor vehicle sector “was widely anticipated next year on the back of improving global conditions, a buoyant domestic car market and new export programmes announced recently by Volkswagen and Nissan among others”, the Business Day report said.

Original article from Car