ECDC Automotive Conference_Apr 11

Facilitating investment into the province ECDC is the official economic development agency for the Eastern Cape province. The agency aims to create an environment that is conducive for sustainable economic growth by providing channels, platforms and resources to bring about robust economic activity in the province.

As part of the agency’s interventions to grow the provincial economy, ECDC promotes the investment potential of the province, and provides finance and enterprise support services for local enterprises and investors in key growth sectors which include automotive and general manufacturing.

ECDC assists new and existing investors at no cost with: • Identifying business opportunities in key sectors • Facilitating and financing joint ventures • Accessing investment incentive schemes and local business service networks • Creating access to a diverse portfolio of available land and buildings • Facilitating corporate relocations and aftercare services • Lobbying provincial and national government for relevant interventions

Providing platforms for global trade

AUTO INDUSTRY IN THE EASTERN CAPE

ECDC’s trade and export promotion service focuses on creating maximum exposure for Eastern Cape companies while increasing export sales. The agency encourages partnerships between local manufacturers and foreign industry players such as agents and distributors, and also through joint ventures and strengthening ties between local exporters and importers.

Besides creating access to foreign trade destinations through preferential trade agreements, ECDC is well-positioned to provide advice and assistance to both investors and exporters interested in harnessing the production, manufacturing and export potential of the province.

In several of its programmes aimed at growing export and trade, ECDC works closely with the provincial Department of Economic Development and Environmental Affairs, the national Department of Trade and Industry, the Coega and East London IDZ’s, local and regional business chambers.

For more information on automotive opportunities, contact the Eastern Cape Development Corporation on tel +27 (0) 43 704 5606, e-mail invest@ecdc.co.za or visit www.ecdc.co.za

EASTERN CAPE

The automotive industry in the Eastern Cape is of national importance.

The province produces around 40% of South African car sales and 60% of car exports by unit. When the components industry is included, the province accounts for a significant portion of the South African automotive sector value added and employment in the Eastern Cape.

Motor manufacturers in the Eastern Cape Mercedes-Benz South Africa (MBSA) in East London has invested R2 billion for the recent contract to assemble the next generation of the C-Class. MBSA also produces Mitsubishi’s Triton pick-up range and FUSO trucks, Mercedes-Benz commercial vehicles and buses, and also assembles Freightliner trucks, a leading American brand.

Volkswagen South Africa (VWSA) in Uitenhage is the largest German investment in South Africa. VWSA recorded a 0,5% increase from 2009 to 19,9% in 2010 in the South African market share. The group also had an impressive 101% increase in production volumes in the last year.

General Motors South Africa (GMSA) which produces the Chevrolet, Isuzu, Hummer and Cadillac brands has injected R530 million to beef up its production facility in Port Elizabeth.

The Ford Engine Plant manufactures the Rocam 1300/1600 engines for export to Europe, India, China and Russia and also powers the local Icon and Ford Bantam ranges.

Optimal Energy’s Joule, South Africa’s first battery-operated electric car is also likely to be built in the province at the East London Industrial Development Zone (IDZ).

ADVANTAGES FOR AUTOMOTIVE INVESTORS South Africa has one of the best infrastructure and service industries among developing nations, particularly in roads, telecommunication, harbours, banking systems, insurance and systems and shipping.

The East London and Coega IDZs offer world-class industrial infrastructure and incentives that meet the needs of OEMs and component manufactures. Both IDZs are positioned with ease of access to the ports, airports, road and rail networks in East London and Port Elizabeth.

The East London IDZ’s 16ha Automotive Supplier Park houses world renowned suppliers who currently manufacture components for the local and export market. Component manufacturers currently located at the East London IDZ are first and second tier suppliers for the current Mercedes Benz C-Class production.

The 216 ha Nelson Mandela Bay Logistics Park (NMBLP) bordering VWSA in Uitenhage is another location available to automotive component suppliers. The NMBLP is managed by Coega Development Corporation.

INVESTMENT INCENTIVES 1. Motor Industry Development Programme (MIDP) The MIDP provides a stable policy for the automotive industry and features these key elements: • Gradual tariff reduction and an import rebate credit facility • Competitive components for export • Duty Free Allowance • Productive Asset Allowance

The province has also seen a considerable growth of companies which supply raw materials and semi-finished products required by automotive manufactures. These include chemicals, plastics, industrial textiles and fabrics.

2. National incentives The South African Department of Trade and Industry (the dti) supports investment through the provision of several grants and incentives which include: • Accelerated depreciation of land and building used for manufacturing • Automotive Production Development Plan: import rebates • Critical Infrastructure Fund: up to 30% of capital cost • Export Marketing and Investment Assistance: partial compensation for developing export markets • Enterprise Investment Programme: non-refundable cash grant ranging from 15% to 30% of investment in assets for local and foreign investments in manufacturing, tourism, and textile industries • Foreign Investment Grant: up to ZAR 10 million for qualifying projects • Skills Support Programme: three year cash grant for training • Strategic Investment Programme: tax credit

Locally produced South African sales

Locally produced export volumes

Manufacturer

2008

2009

2010

Manufacturer

2008

2009

2010

GMSA MBSA VWSA Total

46,774 22,666 53,675 123,115

26,775 15,410 32,964 75,149

28,507 15,836 43,328 87,671

GMSA MBSA VWSA Total

8,890 37,529 39,779 86,198

1,695 31,732 29,027 62,454

993 38,904 76,787 116,684

Automotive components, raw materials and semi-finished products OEMs in the Eastern Cape source a significant portion of components locally, supporting a major industry of over 160 automotive component manufacturers. Local automotive components companies produce engines and engine components, catalytic converters, leather seats and upholstery, as well as tyres and tubes.

Source: NAAMSA/RGT, April 2011

Source: NAAMSA/RGT, April 2011

SMGAFRICA_6272

The Eastern Cape is a suitable location for any investor looking to establish a production facility in the Southern hemisphere, both to service the growing local and export markets.