Cool your engines, tech is ‘not a threat’ to SA car industry

Business

Cool your engines, tech is ‘not a threat’ to SA car industry

Small car-part suppliers are not in danger of being shunted out of business by new tech, says an industry expert

David Furlonger


Warnings that new local entrants in the vehicle components industry risk their products becoming obsolete because of rapid advances in technology and materials are unfounded, says Ugo Frigerio, president of the National Association of Automotive Component and Allied Manufacturers (Naacam).
Critics of government automotive policy warn that pressure for more local investment, particularly by small black industrialists, ignores the fact that many of the parts that go into today’s cars and commercial vehicles, will not be around much longer. They will either disappear altogether or require different materials.
The most obvious example is the global shift away from the internal combustion engine towards all-electric motors. But there are many more, less obvious changes across the entire automotive design chain.
Volkswagen SA MD Thomas Schaefer says a scattergun approach to future local content is risky. The government and industry should take a long-term strategic view on what components and technologies are best suited to SA.
Frigerio, however, said the SA supply industry was capable of dealing with changing industry demands. “Our major vehicle manufacturers are all part of global networks. As new technology appears, they will ensure their supply base has the means to cope.”
Motor industry policy from 2021 will require SA motor companies, hoping to access government investment incentives to increase the value of local content in their vehicles to at least 60%. The current industry average is below 40%.
To get there, and to meet government demands for more black participation in the industry, companies will have to stimulate the creation of hundreds of black suppliers. A R4.5bn fund, using money from motor companies, will pay for this.
Most of the new participants will be at sub-supplier level, providing parts and sub-assemblies to the major components producers – nearly all multinational subsidiaries – that supply completed parts direct to vehicle assembly lines.
It is the smallest sub-suppliers – producing a narrow range of small “widgets” – that are considered most at risk from changing product demands.
Frigerio, however, said: “New-generation vehicles will still need widgets. What will change is how they are made, and what they contain.”
Assuming quality and costing was up to scratch, motor companies and major components suppliers would help newcomers’ transition to new manufacturing processes.
He also downplayed fears that some traditional large components would eventually disappear. “Some people have suggested that silent electric motors will negate the need for materials to absorb noise. That’s simply not true. The sound of a combustion engine hides wind and road noise. There will no longer be anything to mask them. You will even hear the sound of wind across your exterior mirrors. Anti-noise materials will be as important as ever.”
Frigerio was speaking in Durban, during a break in a Naacam conference at which localisation and black participation were the main themes.
Alex Holmes, commercial director of the German-owned Mahle Behr SA components company, said newcomers were not the only ones challenged by new technologies. The SA company, which specialises in air conditioning and engine cooling systems, does business in a country that has so far rejected new engine technologies, in favour of traditional petrol and diesel power.
Holmes asked the conference: “As a multinational components company, is it attractive to invest in SA now when you might prefer to spend your money on something that will bring you longer-term profits in the future?”

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