OVERVIEW
Automotive Chinese investors are building at the Coega Industrial Development Zone.
SECTOR INSIGHT Manufacturers are eyeing the African market for growth. • Exports have doubled in 10 years.
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he automotive sector contributes 33% to manufacturing GDP and about 6% to overall GDP. It produces approximately 600 000 vehicles per year, supporting 113 000 jobs in three provinces. Exports have doubled in the 10 years to 2018. Some of the world’s leading original equipment manufacturers (OEMs) have recently made large investments in new plant and technology. According to the National Department of Trade and Industry (dti), the figure invested since 2009 is approximately R45-billion. 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 industry itself is looking to Africa for new markets. By increasing total production numbers to one-million vehicles, the sector will be more viable. The dti, working together with the NAAMSA, has set targets for 2035 to increase production to 1% of world volumes (1.4-million vehicles), 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). Beijing Automotive Industry Group (BAIC) expects to be building 50 000 vehicles per year at its site at Coega Industrial Development Zone (IDZ) by 2022. BAIC’s investment follows that of another Chinese firm, First Automotive Works (FAW). Companies like BAIC may be positioning themselves to push into Africa, not only for selling vehicles but for automotive parts and SOUTH AFRICAN BUSINESS 2019
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partly-assembled kits. A new panAfrican organisation has been established to promote the auto industry on the continent, the African Association of Automotive Manufacturers (AAAM). Most international brands such as Volkswagen have given responsibility for Africa to their South African offices. VWSA is in a joint venture in Kenya and is exploring opportunities in Rwanda. VWSA is based in the Eastern Cape where it manufactures half of the country’s passenger vehicles and provides 51% of South Africa’s vehicle exports. The sector accounts for over 40 000 formal sector jobs in the Eastern Cape. Volkswagen’s two new types of Polos started rolling off the production line in Uitenhage in 2018. Volkswagen’s R6.1-billion investment will take production up to full capacity of 160 000 vehicles in 2019, from 110 000 in 2017. The increase will mean that a third shift will be introduced. In addition, V WSA makes 130 000 engines for local demand and for export. Ford in Port Elizabeth is the country’s other engine manufacturer.
