The strong rand and cheaper imports are heavily affecting the local car parts manufacturers, of which many find themselves losing out on the export market.

The strong rand and cheaper imports are heavily affecting the local car parts manufacturers, of which many find themselves losing out on the export market.

New vehicle sales may be experiencing record highs, but the component sector, with its slim profit margins, is feeling the brunt of the current economic optimism. The rand’s 18 per cent strengthening against the US dollar had greatly affected profits, Clive Williams, executive director of the National Association of Automotive Components and Allied Manufacturers told .

Williams said that many of the smaller parts manufacturers that had been building up distribution networks in the US had been forced to abandon their programmes. Only the larger companies, such as Dorbyl and Shatterprufe, were still able to continue exporting to the US.

The rand’s strength has already been blamed for the closure of several factories, and Williams said companies that had adopted the “continual cost-cutting” approach were faring relatively better in the current environment.

While vehicle and parts exports to the US had grown steadily during 2000 to 2002, exports slumped 14 per cent year-on-year by November 2004, and 23,3 per cent for year-to-date.

At the same time, Williams also slammed local vehicle manufacturers who, he said, were threatening to buy cheaper imports rather than use locally manufactured parts. Component manufacturers now have to charge lower prices for goods sold locally.

This drawback comes as the vehicle export sector continues to blossom, following VWSA’s announcement this week that it plans to increase exports and produce buses and trucks, and with General Motors expected to announce an export programme of its own soon.

Original article from Car