Welcome to the ninth edition of the South African Business journal. First published in 2011, the publication has established itself as the premier business and investment guide to South Africa.
This issue has a focus on economic recovery plans which have been put in place to tackle the challenges thrown up by the global Covid-19 pandemic. National government’s focus on infrastructure and the use of Special Economic Zones is highlighted, together with a feature on the nascent maritime economy. Regular pages cover all the main economic sectors of the South African economy and give a snapshot of each of the country’s provincial economies.
South African Business is complemented by nine regional publications covering the business and investment environment in each of South Africa’s provinces. The e-book editions can be viewed online at www.globalafricanetwork.com.
OVERVIEW Automotive The
OVERVIEW Automotive The automotive sector makes up a third of South Africa’s manufacturing capacity. SECTOR INSIGHT Supplier parks and Special Economic Zones are playing to South Africa’s automotive strength. The East London IDZ hosts a number of automotive companies. Vehicle sales declined sharply in the Covid-19 lockdown period. For the year to September 2020, sales of passenger vehicles went down by 34.4% and by a similar amount in light commercial vehicles. Analysts will be closely watching consumer behaviour as economies open again to monitor the effects of working from home and the further growth of the ride-hailing trend. The manufacturing part of the automotive and components sector is a vital part of South Africa’s manufacturing landscape. It is responsible for more than 112 000 jobs which translates to more than 450 000 jobs once the multiplier effect is taken into account. The SouthAfrican automotive industry also accounts for: • 30.1% of the country’s manufacturing output. • 6.9% of GDP (4.4% manufacturing, 2.5% retail). • 27.6% of value addition within domestic manufacturing. • exports to 151 countries, 74% to EU. • exports in 2018 of vehicles and components of R201.7-billion, a record (and 15.5% of country total). • exports in 2019 of 387 125 vehicles achieved a new record amount of R148-billion and components also set a new record of R53.7-billion. (National Association of Automobile Manufacturers of South Africa, NAAMSA) Foreign direct investment (FDI) into South Africa from seven of the eight Original Equipment Manufacturers (OEMs) totalled R7.3-billion in 2019 and a further commitment was made of another R40-billion investment over the next five years. The component sector invested R3.5-billion in 2019 (Automotive Industry Development Centre, AIDC). 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 onemillion vehicles, the sector will become more viable. The National Department of Trade, Industry and Competition (the dtic), working together with the National Association of Automobile Manufacturers of South Africa (NAAMSA) has set targets for 2035 to increase production to 1% of world volumes (which would mean 1.4-million more vehicles made SOUTH AFRICAN BUSINESS 2021 78
OVERVIEW in SA), increasing local content and doubling employment and blackowned businesses in the sector. South Africa has three centres of automotive production: the Eastern Cape, Gauteng and KwaZulu-Natal. In the Eastern Cape, the OEMs are Volkswagen, Mercedes-Benz, Isuzu and Beijing Automobile Investment Corporation (BAIC). Ford has an engine plant in Port Elizabeth. In KwaZulu-Natal Toyota has a large plant just south of Durban. Although the manufacturers of loaders, dump trucks and haulers are not counted in the tally of SouthAfrican OEMs, Bell Equipment, a global leader in its field, runs a large manufacturing site in Richards Bay. Dezzi Equipment is based in Port Shepstone. In 2018 AIH Logistics started assembling Mahindra and Bolero bakkies from kits imported from India on a site at the Dube TradePort. Pretoria is home to BMW, Nissan and Ford. All three centres are making use of targeted land allocation to try to boost the sector through industrial parks or Special Economic Zones. The idea is to get economies of scale through grouping companies which serve one another. Training becomes easier and costs can be reduced. Chinese OEM BAIC is the first new entrant into the market to set up within an SEZ. The planned investment in the Coega SEZ by BAIC and its partners is R11-billion. BAIC expects to be building 50 000 vehicles per year at its site at the Coega SEZ by 2022. Automotive component suppliers and downstream manufacturers such as electronics components, metal fabrication, plastic moulding, precision machining and trim are expected to take up opportunities in the Automotive Zone within the Coega SEZ, as they do at the East London Industrial Development Zone (ELIDZ). Companies in the ELIDZ which manufacture in support of the Mercedes-Benz operation include Feltex Automotive Trim, TI Automotive (brake and fuel pipes), Yanfeng Automotive Interiors, Linde+Wiemann (seat frames, recliners, metal surface treatment) and Onelogix VDS, which is a logistics company that delivers motor vehicles. In line with the policy of developing industrial economic hubs, the Durban Automotive Supplier Park is being built at Illovo, south of Durban and near to the Toyota plant. The Dube TradePort Corporation will manage the project, which covers 1 013ha. The Durban Automotive Cluster, which has 39 member companies, ONLINE RESOURCES Automotive Industry Development Centre: www.aidc.co.za Manufacturers: www.naacam.co.za National Association of Automotive Component and Allied National Association of Automobile Manufacturers of South Africa: www.naamsa.co.za is funded by the municipality. Together, these firms have about 17 000 employees. Trade and Investment KwaZulu-Natal (TIKZN) estimates that the province’s component automotive manufacturers enjoy a combined turnover approaching R10-billion. The Tshwane Automotive Special Economic Zone (TASEZ) is a project of the Gauteng Province, the Department of Trade, Industry and Competition (dtic) and the City of Tshwane. The implementing agent is the Coega Development Corporation (CDC), the developer and operator of the Coega SEZ. The TASEZ, branded as “Africa’s First Automotive City”, has a mandate to promote economic participation for SMMEs and create employment in the region. Sectors targeted include security, ICT maintenance, facility maintenance, construction, automotive supply chain, marketing and advertising, catering and events. Both the Nissan and BMW plants are expanding and Ford is investing in Silverton. An Incubation Centre for SMMEs has been launched at Nissan’s assembly plant in Rosslyn. The facility supports small enterprises through subsidised rental and mentorship and training. Management of the centre is done by the Automotive Industry Development Centre, a subsidiary of the Gauteng Growth and Development Agency (GGDA). ■ 79 SOUTH AFRICAN BUSINESS 2021
