SA seems set to keep its No 1 spot in Africa
Auto manufacturing sees investment
THE global automotive industry produced more than 91-million vehicles last year‚ 1.1% up from 2014. Of that number‚ Africa accounted for 960 527 units‚ with South Africa producing the bulk of these at 615 658.
This year‚ Ford announced a R2.4billion investment in South Africa to build its Everest sports utility SUV.
BMW is spending R6-billion to switch production at Rosslyn from the 3 Series to the X3 in 2018.
Chinese car maker Beijing Automotive Industry Company will invest R12billion in a new Eastern Cape plant.
Nissan SA is expected to announce it will join its global counterparts in producing the new NP300 Navara.
Renault SA chief executive Nicholas de Canha has confirmed that his company is keen to see the Nissan factory also produce the future Renault Alaskan bakkie‚ which shares a platform with the Navara.
All these investment announcements come a year after speculation was rife that South Africa was facing a threat from automotive manufacturing further north in Africa.
Former trade and industry minister, Alec Erwin, has been instrumental in creating an automotive industry policy framework in Nigeria and its neighbouring countries. The policy is based on South Africa’s Automotive Production Development Programme.
But in Nigeria‚ automotive companies are partnering with vehicle assemblers‚ not to boost the country’s local industry but to bypass import duty legislation on new vehicles. The industry is not at full-tilt and operates to put components together.
These semi-knockdown kits are still manufactured in South Africa.
This explains why South Africanbased car companies are at the forefront of a new organisation‚ the African Association of Automotive Manufacturers (AAAM).
“The aim is promoting a policy environment that is conducive to the development of the automotive sector‚” says Jeff Nemeth‚ AAAM chairman and president and chief executive of Ford sub-Saharan Africa.
Nemeth is in Nigeria for meetings with President Muhammadu Buhari, as well as representatives of the country’s National Automotive Design and Development Council and its National Automotive Manufacturers Association.
The push towards supplying the rest of the continent with kits and components‚ along with lucrative export contracts‚ has been widely credited for the recent investments into South Africa.
“The investments did come as a surprise‚” says Byron Messaris‚ senior industry analyst at Frost and Sullivan.
“But when you look at the export model‚ it starts to make sense.
“It is all about return on investment‚” says Craig Parker‚ programme manager for mobility at Frost and Sullivan.
Messaris remains confident the government is committed to the local industry and expects more uptake.
Commenting on the possibility of a hub further north on the continent‚ Messaris says: “Alec Erwin and others are almost gleefully optimistic.”
Parker is confident planned transport corridors will open things up over the next 10 to 15 years and points to the new Techno City north of Nairobi as one area of opportunity.
However‚ he expects much of the demand to be for commercial vehicles.
There is potential for commercial vehicle manufacturing‚ and Parker predicts that some companies will seek a first move advantage. Is China likely to play a major role in this?
“We can’t underestimate the bilateral agreements in place through Brics [Brazil, Russia‚ India‚ China and South Africa]‚” says Messaris‚ but he points out that companies such as FAW have been battling to compete against established rivals such as Daimler and Isuzu Trucks.
Volatility in West Africa is also creating a situation in which people are questioning buying a new car.
On the strength of this‚ South Africa looks set to maintain its dominant position as the No 1 auto manufacturing country on the continent.
However, Morocco increased its automotive production by 24.3% last year to 288 329 vehicles, making it the second-largest automotive manufacturing country in Africa. — BDLive