Standard Bank group economist Iraj Abedian says the South African automotive industry could generate as much foreign exchange next year as the gold mining sector.

Standard Bank group economist Iraj Abedian says the South African automotive industry could generate as much foreign exchange as the gold mining sector next year.


If foreign exchange earnings from motor vehicle and automotive components proved to be less volatile than export earnings from commodities, the rand could become more stable, Abedian told .


The banks forecast that automotive exports would total R21,5 billion this year compared with R31,4 billion earned by the gold mining sector. However, export earnings of fully built-up vehicles and automotive components were set to equal or overtake gold earnings next year.


The growth in automotive industry exports reflected the growing diversity of South Africa's exports and the lower reliance of the South African economy on the mining sector, Abedian added.


Economist Monica Ambrosi added that while the automotive industry had become more globally competitive through the trade and industry department's MIDP, gold sales had declined because central banks no longer required gold for reserves.


"GDP has been delinked from dependence on the primary sector," said Abedian. He also dismissed the view that the rand was a commodity currency, with its value linked to the performance of commodity prices, such as gold and platinum.


CARtoday.com reported recently that the value of South Africa’s automotive exports had doubled from R20 billion to R40 billion since 2000. The automotive component sector saw a surge in exports from R12,6 billion in 2000 to R18,6 billion in 2001, with a slight slowdown in the pace of growth to a figure of R22,9 billion last year.


With the commencement of Toyota SA’s export programme to Australia, the imminent investment of more than R75 million by three foreign component companies in the Blue IQ programme’s automotive supplier park in Rosslyn, the possibility of DaimlerChrysler SA exporting left-hand drive C-Class vehicles to America and the strong likelihood of the Ford Motor Company of SA starting a fully built-up export programme of its own, the automotive industry looks set to steadily increase the generation of foreign exchange for the South African economy.

Original article from Car