SA’S CAR MAKERS IN TROUBLE
South Africa’s auto industry is in decline due to the country’s deteriorating infrastructure.
This means that the fundamental challenge many vehicle assembly operations face is that they are becoming less vital to the success of their parent companies.
That’s the view of Justin Barnes – director of African Industrialisation Services, and professor at the Gordon Institute of Business Science and an expert on the automotive industry.
Quoted by Engineering News, Barnes explains that we have a very advanced vehicle production base. But that base is both export-oriented and dependent on the performance of the domestic market.
That domestic market, he goes on, is smaller now than it was in 2006.
Barnes adds that we have local and national infrastructure, which has deteriorated at the same time that we have seen tremendous improvement in other emerging regions of the global automotive industry.
BMW SA NOT AFFECTED BY US TARIFFS
In a similar vein, BMW South Africa has confirmed that it has no production aimed at the US market planned for the next two years.
But BMW SA’s CEO, Peter van Binsbergen, argues that an extension to the current trade deal with the US – AGOA – or a similar bilateral trade deal is urgently needed.
US President Donald Trump is due to sign punitive tariffs into force early next week, which render AGOA null and void.
Van Binsbergen says BMW’s Rosslyn plant, near Pretoria, won’t be affected by the US tariffs in the short term. But long term, he says, South Africa needs AGOA.
TREASURY WARNS ON SRD GRANT
National Treasury is standing firm on its view that the country can’t afford the SRD grant.
The grant was initially introduced as a temporary measure during the COVID-19 pandemic.
Treasury has allocated R35.2 billion to fund the R370 per month payment in this financial year, but officials are warning about a recent High Court ruling. This requires the government to expand eligibility for the grant and adjust its value for inflation to account for changes in the cost of living. The Treasury is appealing the judgment but notes that it presents a significant fiscal risk.
MARKETS
Turning to the markets, the JSE closed on Thursday evening with the All Share up 0.3% - the Top 40 up 0.2%. London’s FTSE was up 0.6%.
In New York, the Dow and the S&P 500 were both up 0.8% and the Nasdaq was up 1%. Again, record closing highs for the S&P 500 and the Nasdaq.
Tokyo and Sydney this morning are both just above flat – Hong Kong down 0.7%.
The US dollar - $1.18 to the euro – the rand – R17.51 to the dollar, R20.61 to the euro and R23.92 to sterling.
Gold - $3,338, platinum $1,389, Bitcoin – just under $109,200 and Brent Crude oil – just over $68.50 per barrel.
