South African Business 2020 edition

OVERVIEW
Long-term state support of the
industry through the Automotive
Production and Development
Programme (APDP) is a major reason
for the continuing health of
this vital sector. The industry itself
is looking to Africa for new markets.
By increasing total production numbers
to one-million vehicles, the
sector will be more viable.
The National Department of
Trade and Industry and Competition
(the dtic), working together with the
National Association of Automobile
Manufacturers of South Africa
(NAAMSA) has set targets for 2035
to increase production to 1% of
world volumes (which would mean
1.4-million more vehicles made in
SA), increasing local content and
doubling employment and blackowned
businesses in the sector.
The Eastern Cape manufactures
half of the country’s passenger
vehicles and provides 51% of
South Africa’s vehicle exports. The
sector accounts for over 40 000
formal sector jobs in the province.
Phase 1 in the construction process
of the vehicle assembly plant of
Beijing Automotive Group South
Africa (BAIC SA) was completed
in 2018. The total project involves
an investment of R11-billion. BAIC
expects to be building 50 000 vehicles
per year at its site at Coega
SEZ by 2022.
The decision in 2017 of General
Motors to disinvest from South
Africa has not had any knock-on effect.
The company’s sale of its plant
in Port Elizabeth was just one sale
of many around the world. Isuzu
has bought the factory.
In January 2018, Mercedes-Benz
South Africa (MBSA) started producing
the Mercedes-AMG C 63 S at its
East London factory, after an investment of R200-million. MBSA started
exporting record volumes in 2016 and has kept up the pace since then.
BMW South Africa has invested R6-billion in its Rosslyn plant to
manufacture the new BMW X3 model. Nissan is another big automotive
manufacturer with a plant at Rosslyn, north-west of Pretoria.
Gauteng is also home to a strong automotive components industry,
together with several bus and truck assembly plants. These include
Scania, TFM Industries and MAN Truck and Bus South Africa, as well as
the Chinese truck manufacturer FAW, which owns an assembly plant in
Isando. Bejing Automotive Works (BAW) assembles taxis at Springs.
In 2016, Toyota invested R6.1-billion into its massive plant at Prospecton,
Durban. The company regularly sells about a quarter of the vehicles sold
in South Africa, and accounts for the same proportion of exports. The
Corolla car, the Hilux bakkie and the Fortuner SUV are manufactured at
the plant.
Automotive components
South Africa has a sophisticated automotive components sector. The
catalytic converter sector experienced incredible growth for a number of
years but volatility in the platinum mining sector, together with increased
interest in electric vehicles and hybrids, means that exporters (largely
based in Port Elizabeth) have had to work harder.
Tyre and glass manufacturers are clustered around the areas where
the automotive industry is active.
Tyre manufacturer and distributor Sumitomo Rubber South
Africa was established in 2014 and makes and sells brands such as
Dunlop, Falken and Sumitomo Tyre into Africa. Bridgestone Tyres
has plants in Port Elizabeth and Brits and Continental makes tyres
in Port Elizabeth.
The large number of vehicle models produced in South Africa is a
complicating factor for the components sector: low volumes often mean
high prices. Two Port Elizabeth companies export significant portions of
their production to overcome this: Schaeffler SA exports to its international
parent so that it can achieve higher volumes. Shatterprufe supplies
the majority of windscreens to the South African market but there are
12 model ranges to serve.
ONLINE RESOURCES
Automotive Industry Development Centre: www.aidc.co.za
National Association of Automotive Component and Allied
Manufacturers: www.naacam.co.za
National Association of Automobile Manufacturers of South
Africa: www.naamsa.co.za
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SOUTH AFRICAN BUSINESS 2020