Car industry could be gone in 7 years

According to David Powells, the President of the National Association of Automobile Manufacturers of South Africa (Naamsa), the country’s motor manufacturing industry will be gone by 2016 unless it becomes more competitive. All the more reason for the South African Reserve Bank to start managing the exchange rate of the rand more actively… at R7.35 per dollar, our manufacturers simply can’t compete globally. Car exports are down 35% yoy, and component exports 40%. Unless the rand moves to a more realistic level – say, about R8.50/$ – those export industries won’t recover.

Advertisements

4 Responses to Car industry could be gone in 7 years

  1. wonder says:

    i bet david powells is wrong, this business of prediction is hard especially about the future so don’t worry Rob the car industry will survive (i take the risk of predicting its survival) for now the relatively high interest rates are good for carry trades-lets make hay whilst the sun still shines…

    • Robert Brand says:

      Hi Wonder – yes, high interestrates are good for the carry trade but not for the economy! But cutting interest rates so far hasn’t weakened the rand. What the SARB has to do is intervene more aggressively in the FX market to build reserves.

  2. wonder says:

    i understand the point you trying to make,just looking after after my own self interest-remember Adam Smith. And if we are take the Schumpeterian notion of creative-destruction as an article of faith then this predicted process of renewal brought about by a strong Rand may in fact be good for the car industry and the SA economy as a whole.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: