South African Business 2018 edition

OVERVIEW
• Volkswagen SA exported 20%
more Polos in 2015 than the
year before, and kept up the
momentum into 2016 and
2017. In 2018, the Uitenhage
plant will introduce three
shifts, increasing export
volumes even further.
• National export volumes
reached a record 344 822 in
2016, earning R118.1-billion.
• Mercedes-Benz exported
more than 10 000 vehicles out
of the Port of East London in
one month in April 2016.
• BMW will invest R6-billion to
start producing the X3 sportutility
vehicle.
• Nissan will double local production
from 2018.
• Ford will hire 1 200 new staff as
it ramps up production of the
Ford Ranger and introduces
the Ford Everest.
• In 2016, Toyota invested
R6.1-billion into a large 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 latest foreign investment,
and one of the biggest, will see
Beijing Automobile Corporation
(BAIC) take a 65% stake in a
multi-billion-rand joint venture
with the Industrial Development
Corporation at the Coega
Industrial Development Zone
outside Port Elizabeth. BAIC is a
Chinese state-owned enterprise
with several brands. The intention
is to start production on the
85 000m² site in 2018 and the
target is annual production of
100 000 cars, bakkies and sport-
utility vehicles. About 2 500 jobs are expected to be created. This follows
the earlier investment of Chinese manufacturer First Automotive
Works (FAW), which has established a R600-million assembly plant in
Zone 2 at Coega.
Companies like BAIC and FAW may well be positioning themselves
to push into Africa, not only for selling vehicles but for sending automotive
parts and partly-assembled kits further north. A new pan-African
organisation has been established to promote the auto industry on the
continent, the African Association of Automotive Manufacturers (AAAM).
Automotive components
South Africa has a sophisticated automotive component sector. The
catalytic converter sector experienced incredible growth for a number
of years but some 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.
A catalytic converter changes bad gasses coming out of exhausts
into less harmful gas. The converter uses platinum group metals (PGMs),
of which South Africa has about three-quarters of the world’s reserves.
Tyre and glass manufacturers are clustered around the areas where
the automotive industry is active. Sumitomo Rubber South Africa,
which includes Dunlop among its brands, is spending R2-billion on
expanding production in Ladysmith, KwaZulu-Natal. 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
Automotive Industry Export Council: www.aiec.co.za
Automotive Supplier Park: www.supplierpark.co.za
National Association of Automobile Manufacturers of South
Africa: www.naamsa.co.za
National Association of Automotive Component and Allied
Manufacturers: www.naacam.co.za
SOUTH AFRICAN BUSINESS 2018
102