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Explore the South African automotive industry, covering OEMs, exports, policies, and investment trends. Learn about the economic contribution, major players, export destinations, and policy frameworks shaping the sector's growth. Delve into key performance indicators, assembly investments, and development programs driving the sector forward. Gain insights into supportive trade environments, automotive production statistics, and future market projections.

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  1. PPC PRESENTATION: AUTOMOTIVES EDD Parliamentary Portfolio CommitteePresentation on SA Automotive SectorDepartment of Trade and Industry Broaden participation

  2. PPC PRESENTATION: AUTOMOTIVES SA Automotive Industry: OEM Representation • European light motor vehicle manufacturers represented in SA - Mercedes Benz, BMW, and Volkswagen - are all wholly owned subsidiaries • Japanese and American manufacturers - Toyota, General Motors, and Ford - are also 100% controlled subsidiaries • Other major marques imported: European (Peugeot/Citroen, Volvo), Japanese (Daihatsu, Honda, Subaru), Korean (Hyundai/Kia),Indian (Tata, Mahindra), with Chinese brands also growing in the SA market • OEM employment levels: approx. 30 000

  3. PPC PRESENTATION: AUTOMOTIVES SA Automotive Industry: Component Manufacturing • Widespread base of auto component suppliers including global first tier suppliers such as Faurecia, Johnson Controls, Mothersons, Yazaki, Sumitomo, Bosch and Behr • 120 1st tier suppliers, 75% of them multinationals • Over 200 2nd and 3rd tier suppliers, mostly local • Supplier Employment Level‏: approximately 80 000 in 2014

  4. PPC PRESENTATION: AUTOMOTIVES SA Automotive Industry: Economic Contribution • The Automotive Industry is the largest manufacturing sector in the SA economy and in 2014 the wider industry contributed approximately 7.2% of GDP • The export-led growth model came under pressure in 2009 as a result of the global economic crisis • Since then, there has been growth in both export and domestic business (post-2010 and projected through the APDP period) • Approximately 566 083 vehicles produced in SA 2014; 2015 projection: 627 500 (approximately 0.63%) • Auto product exports 2014: R115.7bn (12.7% of total SA exports) • OEM focus on high quality and competitive production e.g. Mercedes Benz Plant, JD Power Platinum Quality Award

  5. PPC PRESENTATION: AUTOMOTIVES Major SA Automotive Exports • OEMS • Nissan – 1-ton pickup into Africa • Volkswagen - Polo series to EU • BMW – 3 Series to Japan, Australia and USA • Mercedes Benz – C Class • Toyota - Corolla/Hilux to EU and Africa • Components (Quoted in R million) – See table • Major export destinations: EU, Africa, USA, Brazil, Japan, followed by Australia, S Korea, India and China

  6. PPC PRESENTATION: AUTOMOTIVES Supportive Trade Environment • SADC FTA – market of 200 million consumers • EU FTA; AGOA into US • Possible future FTA with SADC, COMESA & EAC - with a market of 700 million consumers • Regional Industrialisation: opportunity for SA components/sub-assemblies to support initial-stage assembly in other countries looking to industrialise

  7. PPC PRESENTATION: AUTOMOTIVES SA vehicle population: (Registered vehicles 2011 - 2013 and projections for 2015 & 2017) Source: NAAMSA

  8. PPC PRESENTATION: AUTOMOTIVES SA Autos Support Policy History

  9. PPC PRESENTATION: AUTOMOTIVES Key Performance Indicators: Post 1995

  10. PPC PRESENTATION: AUTOMOTIVES Post 1995: Increase in SA automotive global market share

  11. PPC PRESENTATION: AUTOMOTIVES SA Assembly Investment Trends

  12. Automotive Production and Development Programme: 1 PPC PRESENTATION: AUTOMOTIVES • The APDP consists of 4 pillars aimed at supporting and developing the SA automotive industry • Stable import tariffs: 25% for CBUs; 20% for CKD components • Vehicle Assembly Allowance(VAA): manufacturers with a minimum plant volume of 50 000 pa allowed to import a percentage of their components duty free (20% - decreasing to 18% over 3 years) • Production Incentive (PI): an allowance for duty free import of vehicles or components, calculated at: • 55% of value added in the SA supply chain; reducing to 50% over 5 years • Special dispensation for vulnerable industries

  13. Automotive Production and Development Programme: 2 PPC PRESENTATION: AUTOMOTIVES • Automotive Investment Scheme (AIS) Purposes: • To stimulate investment and job creation in SA’s automotive sector - in particular: • Investment in technologically advanced automotive production & new and replacement models/components • Increased plant production volumes • Overall strengthening of the automotive value chain Mechanisms: • A non-taxable cash grant paid over 3 years with minimum benefit calculated at 20% for OEMs and 25% for suppliers • An additional 5% and 10% benefit - subject to Economic Benefit criteria • Available to OEMs and component suppliers

  14. PPC PRESENTATION: AUTOMOTIVES APDP: Cumulative Annual Support : 1 • Industry support that is of physical cost to the fiscus is the grant offered under the AIS. • The total investment approved since inception amounts to R25 145 843 725 • Total of incentives approved since inception amounts to R6 902 984 593 • Since inception 245 projects have been approved under AIS; associated new jobs created = 11 351.

  15. PPC PRESENTATION: AUTOMOTIVES APDP: Cumulative Annual Support : 2 Maximum (theoretical) Duty Loss Table above provides not “on budget” support, but support generated through the duty credit system.

  16. Policy Developments: 1 PPC PRESENTATION: AUTOMOTIVES • Electric Vehicles and Green Production • Finalisation of SA EV Roadmap: multi-departmental approach Framework rests on two main pillars: • Creating an environment in which electric vehicles can be operated on South African roads • Supporting the development and production of electric vehicles and relevant EV components • Supporting emerging regional production locations • Other SSA countries looking to kick-start nascent auto industry • Assembly in such countries presents opportunities for expanded SA supply chain developement in the short to medium term

  17. Policy Developments: 2 PPC PRESENTATION: AUTOMOTIVES • Medium Heavy Commercial Vehicle (MHCV) segment • Significant MHCV opportunity: • Encourage higher levels of localisation e.g. through Preferential Procurement • Support increased levels of R&D spend; encourage commercialisation of R&D • Support deepening of component manufacture • Widen distribution and after-sales support in regional markets • Review of APDP under way in consultation with all stakeholders - in the context of maintaining policy certainty

  18. Policy Developments: 3 PPC PRESENTATION: AUTOMOTIVES • The present policy implementation in the MHCV segment has facilitated an improved operating environment for the industry • A number of positive developments have since emerged: • Bus bodies have been designated for public procurement, further catalysing local manufacturing • The Automotive Investment Scheme (AIS) package has been extended to people-carriers/mini-buses, trucks and buses • Large new investments from companies like Iveco, Tata, BAW, Toyota, FAW and Hyundai have recently been announced

  19. Policy Developments: 4 PPC PRESENTATION: AUTOMOTIVES • Strengthening the Supply Chain • Auto Supply Chain Competitiveness Initiative (ASSCI) • Collaboration between all major industry role-players • Wide ranging, 3-year Business Plan activities - all aimed at competitiveness improvement and supplier development • Co-ordinating, measuring and targeting value-adding opportunities

  20. SA Automotive Sector - Now and Beyond: 1 PPC PRESENTATION: AUTOMOTIVES • Vision 2020 • Stimulate expansion of automotive vehicle production to 1.2 million vehicles p/a by 2020 - with associated deepening of the components industry (To be accomplished through long-term partnerships and relationships built with the industry) • Sector-specific Support Programmes - APDP and related: • Encouraging higher levels of investment and value addition • Support for firm- and industry-level competitiveness improvement and supply chain development

  21. SA Automotive Sector - Now and Beyond: 2 PPC PRESENTATION: AUTOMOTIVES • Recent Investment Announcements: • Mercedes Benz: R5bn • General Motors: R1bn • Ford: R3.6bn • Metair Group: R400mill (2008-10) • Johnson Controls: R380m • Opportunities: • Engine parts/components, vehicle interiors, electronic, drive train components, body parts and exterior finishes, aluminium forgings and castings (vis-à-vis OEM project-specific opportunities) • Attract new vehicle assembly opportunities

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