Transcript The South African Auto Industry

The South African Auto Component
Industry
Presentation by Roger Pitot
NAACAM
Structure of the Industry in SA - OEMs
 European vehicle manufacturers BMW,
DaimlerChrysler and Volkswagen are all 100%
subsidiaries
 Japanese and other Multinational manufacturers,
Ford, Nissan, General Motors and Toyota are now
also 100% or majority controlled subsidiaries
 All other major marques are imported – European
(Fiat, Peugeot/Citroen, Renault), Japanese
(Daihatsu, Honda, Subaru), Korean (GM/Daewoo,
Hyundai, Kia), Indian (Tata, Mahindra), and several
Chinese brands in 2007.
The Motor Industry Development
Programme (MIDP): Key Features
 Introduced 1995, extended to 2012, subject to review
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during 2006/7
Duties progressively reducing to 25% CBU and 20%
components by 2012, from 115% and 50% in 1994
Duty-Free import of components of 27% of ex-factory
price of vehicles produced locally
Import credits earned for exports, with benefits
reducing - tradeable
Productive Asset Allowance (PAA) for Investments –
duty credit of 20% over 5 years
Minor programme for heavy trucks and buses
Future Direction of the MIDP
 Detailed review during 2006/7 focusing on
investment and production support
 Ministerial assurances confirm government
support through to 2020
 Review will take account of South Africa’s
WTO obligations by replacing direct export
subsidy
 Future policy will support enhanced investment
and production in the South African auto
industry, particularly local components
MIDP : Industry Performance Since
1995
 Significant improvement in quality and
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productivity. Progressive economies of scale with
local platforms down from 42 to 23
Affordability – New vehicle prices below inflation
for 8 out of 11 years
Large growth in industry exports and, in recent
years, significant growth in domestic market
Stable overall industry employment with modest
growth in specific sectors
Trade deficit has worsened in past two years due
to stronger currency, higher vehicle imports
1970-01
Jan-71
Jan-72
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Monthly Market .
Car Sales History – 1970 to 2006
NewPassenger Car Sales Cycle Including Non-Reports
1970 Onwards
Market Forecast Incl Non Reps
Trend Cycle Forecast Incl Non Reps
45000
40000
35000
30000
25000
20000
15000
10000
Component Exports (R mil)
Component
Catalytic Converters
Seats, Stitched Leather
Engines and Parts
Tyres
Silencers & Exhausts
Road Wheels
Car Radios/Players
Axles
Total Components
1995
388
1019
112
219
76
157
7
3
3318
2000
4682
1926
485
682
377
551
89
63
12640
2006
15810
2549
2200
1220
880
681
377
332
30503
Component Export Destinations – 2006
Main destinations for SA component exports are
the major first-world markets
Germany
Spain
UK
France
Italy
29%
11%
9%
7%
2.2%
Total EU
USA
72%
10%
Component Manufacturers – Key 2006 Data
 The employment of the component
manufacturers totals 79,000, growing at 1.5%
annually
 Sales exceeded R56 billion (€7 bn), with 47%
OE, 30% export, 23% aftermarket
 Capex was R2,2 billion
 Average local content of components exported
was 80%
 Real Vehicle local content only 40%
 8 of the top 10 global manufacturers are
invested in South Africa.
South Africa as a Sustainable, Low-Cost
Manufacturing Base
 World-class, low-cost infrastructure – railways, roads,
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harbours, telecommunications and electricity
Well-developed, efficient capital market and world class
banking and financial services sector
Low manpower costs by first-world standards and abundant
supply of trainable labour
Low cost of factory establishment (competitive & efficient
construction industry, low real estate cost)
Abundant raw material availability and competitive tooling
costs
Competitive and efficient ocean freight and comprehensive
airline network
Opportunities in South Africa
What?
 Technology transfer
 Joint Venture production
 2nd-tier supply
 Direct Investment
Why?
 Advantage of a sustainable, low-cost manufacturing base
 Prospects for above-average economic growth in medium to
long term
 Socio-political stability
 Sound macro-economic policies and targeted industry support
 Acknowledged good quality of life supported by first-world
financial and IT infrastructureg
Thank You !
NAACAM is ready to assist you to
participate in the South African Automotive
Industry
[email protected]
www.naacam.co.za