South Africals Automotive Industry 2011
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SOUTH AFRICA’S AUTOMOTIVE INDUSTRY 2011 TABLE OF CONTENTS List of abbreviations 1 Key developments 2 Automotive demand 3–5 Factors affecting sales Automotive production 6–12 Sector support Investment Local content Labour issues Future production Global position and competitiveness Automotive exports 13–14 Component exports Automotive imports 15–16 Major OEMs 17–23 BMW South Africa Ford Motor Company of Southern Africa General Motors South Africa Mercedes-Benz South Africa Nissan South Africa Toyota South Africa Motors Volkswagen Group South Africa Prospects 24 Main sources 25–26 The material contained in this report was compiled by Shona Kohler and the Research Unit of Creamer Media (Pty) Ltd, based in Johannesburg, South Africa. To subscribe to Research Channel Africa or purchase this report contact: Creamer Media, Tel: +27 11 622 3744 or email [email protected]. Published: June 2011 Cover pictures by Creamer Media, Volkswagen Group South Africa, and Ford Motor Company of Southern Africa. South Africa’s automotive industry 2011 LIST OF ABBREVIatIONS AIS – Automotive Investment Scheme MBSA – Mercedes-Benz South Africa AMH – Associated Motor Holdings MHCV – medium and heavy commercial vehicle APDP – Automotive Production and Development MIDP – Motor Industry Development Programme Programme MSA – Mahindra South Africa CCIG – Catalytic Converter Interest Group Naacam – National Association of Automotive capex – capital expenditure Component and Allied Manufacturers CBU – completely built-up Naamsa – National Association of Automobile CKD – completely knocked-down Manufacturers of South Africa DTI – Department of Trade and Industry Nafta – North American Free Trade Agreement Elidz – East London Industrial Development Zone OEM – original equipment manufacturer FMCSA – Ford Motor Company of Southern Africa OICA – International Organisation of Motor Vehicle GM – General Motors Manufacturers GMSA – General Motors South Africa PAA – Productive Asset Allowance Ipap2 – Industrial Policy Action Plan 2 TSAM – Toyota South Africa Motors IRCC – import rebate credit certificate Volkswagen Group South Africa – VW Group SA JV – joint venture WTO – World Trade Organisation LCV – light commercial vehicle 1 South Africa’s automotive industry 2011 KEY DEVELOPMENTS August 2010: The National Union of Metalworkers embarks on a national strike affecting production at BMW South Africa, Ford Motor Company of Southern Africa, General Motors South Africa, Mercedes-Benz South Africa, Nissan South Africa, Toyota South Africa Motors and Volkswagen Group South Africa. September 2010: South African vehicle production grinds to a halt owing to a strike in the components industry. September 2010: General Motors South Africa announces that it has been awarded a contract to build the new Chevrolet Spark vehicle at its Struandale plant in Port Elizabeth. The vehicle will be sold locally as well as exported. October 2010: The Department of Trade and Industry reveals that it has received ten applications under the Automotive Investment Scheme. October 2010: Mazda reveals that it will produce its new BT-50 pick-up range in South Africa. October 2010: The Ford Motor Company of Southern Africa reveals the new Ranger vehicle that will be produced at its Silverton plant, in Gauteng, at a rate of 110 000 vehicles a year. The local company will also produce the engine, and engine parts, for the new Ranger vehicle at its Struandale plant, in the Eastern Cape. The Ranger and engine will be sold in the local and export markets. November 2010: General Motors South Africa opens its R250-million parts distribution centre in the Coega Industrial Development Zone in the Eastern Cape. December 2010: Chinese auto manufacturer Geely reveals that it intends to expand its activities in the South African market in 2011. December 2010: Mercedes-Benz South Africa clinches the contract to produce the next-generation C-Class vehicle at its Eastern Cape plant, for local sale and export, with production to start in 2014. The contract will require a R2-billion investment, which will increase the plant’s capacity to 65 000 vehicles a year. January 2011: Nissan announces that it is targeting 2012 to launch its Leaf electric vehicle in South Africa, but reveals that certain hurdles remain. January 2011: It is announced that Toyota was the market leader in South Africa’s new vehicle market in 2010, with a market share of 20,5%. It is followed by Volkswagen, with a 14,3% market share. January 2011: It is revealed that the South African government is in discussions with Toyota South Africa Motors over the possible assembly of a minibus vehicle. January 2011: The Ford Motor Company of Southern Africa and the government of Gauteng launch a R100-million initiative to promote black-owned small and medium-sized enterprise development in the automotive industry. February 2011: Volkswagen Group South Africa celebrates the export of the 100 000th new generation Polo vehicle from its Uitenhage plant, in the Eastern Cape. February 2011: Vehicle importer Hyundai Automotive South Africa reveals that it is aiming to be the number one selling brand in the South African passenger car market. March 2011: Indian conglomerate Mahindra & Mahindra indicates that it is hoping to start production of a bakkie in South Africa by the end of 2011 or in early 2012. March 2011: Volkswagen Group South Africa starts construction on a new R500-million press shop at its Uitenhage plant, in the Eastern Cape. March 2011: BMW South Africa indicates that it is planning to expand its exports by 5 000 in 2011. March 2011: A nine-magnitude earthquake strikes in Japan, followed by a tsunami, with a substantial impact on the global automotive industry in the following months. March 2011: Mercedes-Benz South Africa, the Department of Trade and Industry and the East London Industrial Development Zone embark on a roadshow to Germany to lure additional component companies to South Africa to participate in the production of the new C-Class vehicle. March 2011: Nissan South Africa reveals that it is aiming to double production capacity at its Rosslyn plant, in Gauteng, to 100 000 vehicles a year by 2015. April 2011: The National Association of Automobile Manufacturers of South Africa reveals that new vehicle sales in the first quarter of 2011 increased by 22,2%. However, the association cautions that growth may slow as the year progresses. April 2011: Toyota announces its return to South Africa’s booming small-car market, indicating that it will launch the Aygo and Etios vehicles during the course of the year. South Africa’s automotive industry 2011 2 AUTOMOTIVE DEMAND After an extremely difficult year in 2009, new vehicle 10,5% in 2009. The company does not report model- sales in South Africa registered strong growth in all specific sales. segments in 2010, albeit off a low base. In total, 492 907 Other significant holders of market share in 2010 were new vehicles were sold in the country in 2010, which General Motors South Africa (GMSA) (11,2%), Ford was a significant 24,7% increase on total new vehicle Motor Company of Southern Africa (FMCSA) (8,8%) and sales in the country in 2009. New-vehicle-related sales Nissan South Africa (7%). Each of these companies has turnover rose by about 20% for the year, reaching some manufacturing facilities in South Africa, as well as selling R130-billion. imported models. In the passenger car segment, 337 130 vehicles were The top-selling passenger car for 2010 was the sold in 2010, marking a 30,6% increase on sales in 2009. Volkswagen Polo Vivo, of which 23 297 units were sold. This is the highest year-on-year growth rate recorded It was followed by Toyota’s Corolla/Verso/Auris range, in the car market since 1963. In the light commercial the new Polo, the Mercedes-Benz C-Class, the BMW vehicle (LCV) sector, which recorded sales of 133 756 3 Series, the Toyota Fortuner, the Toyota Yaris, the Ford units in 2010, growth was a more moderate 13,2%. Fiesta, and General Motors’ Chevrolet Spark and Aveo. In the medium and heavy commercial vehicle (MHCV) Of these, the top six are all manufactured in South Africa. sector, growth of 16,3% was recorded, with sales in The fastest growing passenger vehicle sector in South the segment amounting to 22 021 vehicles for 2010. Africa is the small-car sector, with growth in this segment In addition to new vehicle sales, an estimated 600 000 far outstripping growth in the new-vehicle market units were sold in the used-vehicle market in 2010. generally. For example, in January and February 2011, In all segments of the new-vehicle market, sales in 2010 new vehicle sales increased by 22% compared with the remained below the peak levels achieved in 2006 and corresponding period in 2010, while sales of entry-level 2007, although growth far exceeded the 10% expansion vehicles in this period jumped by 80% compared with forecast at the beginning of 2010. 2010. In part, the growth in sales in the small-car market New vehicle sales in South Africa in 2010 were dominated has been achieved at the expense of the used-car by Toyota South Africa Motors (TSAM), which held a 20,5% market, and the benefit that the South African economy share of the market. This market dominance was achieved derives from the growth in small vehicle sales may be despite the fact that the company’s share of the market limited as, of the 140 variants available on the local fell from 22,9% in 2009. The fall was a result of difficulties market for under R200 000, only 23 are manufactured in filling the gap left in the entry-level market since the locally, with the balance being imported. company stopped selling its popular low-cost Tazz model. Audit, tax and advisory firm KPMG indicates that Volkswagen Group South Africa (VW Group SA) was the entry-level vehicle pricing increased by 77% from 2000 second-largest seller of new vehicles in South Africa in to 2010, which was below inflation for this period, which 2010, with a market share of 14,3%.