South African Business 2018 edition

OVERVIEW
Automotive
Multi-billion-rand investments are boosting vehicle production.
SECTOR INSIGHT
Auto manufacturers and
government are setting
ambitious targets.
• General Motors has sold
to Isuzu.
South Africa’s automotive industry is on course to produce
a record number of cars in 2017, a remarkable achievement
in the face of the wider economy’s modest performance.
In September 2017, the National Association of Automobile
Manufacturers of South Africa (NAAMSA) was projecting a figure of
622 000, which would beat the volume produced in 2015 by about
5 000. 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 decision in 2017 of General Motors to disinvest from South
Africa does not seem to have had any kind of knock-on effect. The
company’s selling of its plant in Port Elizabeth was just one sale of
many around the world; Isuzu has bought the factory.
Many analysts believe that a figure of one-million vehicles must be
achieved for the industry to become truly sustainable. In the context of
policy uncertainty in some areas of the South African economy it was
significant that a South African Auto Master Plan was announced in July
2017, soon after the policy congress of the African National Congress.
The Department of Trade and Industry, working together with
NAAMSA, set targets for 2035 to increase production to 1% of world
volumes (which would mean 1.4-million vehicles made in SA), to
increase local content and to double employment and black-owned
businesses in the sector.
Automotive and automotive
components make up 30.2% of
total manufacturing output and
about 7% of the nation’s Gross
Domestic Product (GDP).
Automotive manufacturing
takes place in three provinces:
Gauteng (Nissan-Renault, BMW
and Ford); KwaZulu-Natal (Toyota,
Bell Equipment); and the Eastern
Cape (Volkswagen, Mercedes-
Benz, General Motors and Ford
engines). Armoured cars are
also produced in Gauteng. DCD
Protected Mobility makes armoured
cars in Boksburg, which
are branded as Vehicle Mounted
Mine Detectors. In Benoni, BAE
Systems OMC designs and manufactures
protected vehicles.
Volkswagen and Ford are the
country’s only engine manufacturers.
Policy certainty is allowing
for major domestic investments
and it is attracting foreign direct
investment. Some recent milestones
include:
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