South Africa’s automotive industry at a glance
The automotive industry can be described as one of the most global of all industries, with its products spread world-wide. It is one of South Africa’s most important sectors, with many of the major multinationals using South Africa to source components and assemble vehicles for both the local and international markets.
The industry is mainly located in the Eastern Cape and Gauteng, with vehicle manufacturers such as BMW, Ford, Volkswagen, Daimler-Chrysler and Toyota having production plants in the country. Component manufacturers such as Arvin Exhaust, Bloxwitch, Corning and Senior Flexonics all have established production bases here. The industry as a whole employs more than 100 000 people.
In 2013 SA Automotive exports – components and vehicles – exceeded R102 billion, accounting for 11.1% of total SA exports for the year.
Due to the fact that it impacts so many aspects of the economy, the government has identified the automotive industry as a key growth sector.
In January 2013, the automotive production and development programme (APDP) was launched and has since supported significant new investment in the sector. Projected capital expenditure for 2014 is anticipated to reach R7.9bn.
The work of the APDP has been acknowledged by organisations such as the National Association of Automobile Manufacturers of South Africa (Naamsa), which has attributed the relatively high levels of capital expenditure by car manufacturers to this programme.
The APDP’s objective is to raise the volume of cars manufactured in South Africa to 1.2m a year by 2020 and to diversify the component chain. The National Association of Automobile Manufacturers (NAAM) said that production, especially of light motor vehicles, will increase from 2014 because of the APDP.
Government incentives boost component manufacture
In other efforts to grow the sector, the Automotive Supply Chain Competitiveness Initiative (ASCCI) was launched in 2013 to enhance localisation, production and supplier capabilities. This programme is also proving to be success and the dti says it will continue to expand it.
Since the introduction of the Automotive Investment Scheme (AIS) in 2010/11, public sector-approved incentives amounted to R6.3bn and supported investments worth R23bn by original equipment manufacturers (OEMs) in the automotive sector.
The intention of the AIS is to grow and develop the automotive sector through investment in new and replacement models, as well as the manufacturing of automotive components. The objective here is to increase plant production volumes, sustain employment and strengthen the automotive value chain.
In an article published in July 2014, Trade Minister Rob Davies said that “given that automotive manufacturer and components comprises 30% of our industrial sector, with strong linkages to other manufacturing sub-sectors, the impact of such investment on our domestic economy is significant.”