SOUTH AFRICA’S

AUTOMOTIVE

SECTOR- 2005

CONTENT

• SA Automotive Industry Overview• Incentive programmes• Exports• Investments• Conclusion• Contact Details

SOUTH AFRICA AND AFRICA

SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC)

SA AUTOMOTIVE INDUSTRY OVERVIEW

• Current contribution to GDP is 6, 6%

• Leading manufacturing sector in economy

• 84% of Africa’s vehicle production

• Ranked 19th in the world

• 0,7% Global market share for vehicle production

• All major OEMs in SA: BMW, DC, Fiat, Ford, General Motors, Nissan, Toyota, VW

• Industry concentrated in Gauteng, Eastern Cape andKwa-Zulu Natal

MOTOR INDUSTRY DEVELOPMENT PROGRAMME

(MIDP)

§ Implemented in Sept 1995 until end 2012

§ To develop an internationally more competitive and

growing industry

§ In essence, encourage industry to specialize in high

volume products, obtain economy of scale benefits,

export competitively and import low volume products

OBJECTIVES ACHIEVED

§ Surge in exports: 28,2% average annual growth rate

since 1995

§ Significant investments in best practice assets and

state-of-the-art technology accompanies by

technology transfers, skills upgrading and training

§ Acceptance of global challenges by all industry

stakeholders

TARIFF STRUCTURE

115

50

30 27 25 20

253040 34

0

20

40

60

80

100

120

140

1995

2002

2005

2007

2012

CBUCKD

Source: TISA

• Japan was SA’s second largest automotive trading partner in 2004 (R18,6 billion or 19% of SA’s automotive trade)

Main products exported to Japan in 2004 (R6,3 billion):• Passenger cars • Catalytic converters• Road wheels/parts• Silencers/exhausts• Filters• Stitched leather seat parts

SA AUTOMOTIVE EXPORTS TO JAPAN

Main products imported from Japan in 2004 (R12,3 billion)

• Original equipment components• Passenger cars• Tyres• Automotive tooling• Engine parts• Engines• Filters

SA AUTOMOTIVE IMPORTS FROM JAPAN

• The main destinations for SA component exports are the major first-world markets 2004 (2003)

Germany 35,9% (34,5%)

UK 9,0% (7,9%)

Spain 8,3% (6,8%)

France 7,9% (8,8%)

USA 7,2% (8,4%)

Japan 2,3% (2,6%)

• Total EU 71,3% (69,9%)

• NAFTA 8,4% (8,9%)

• SADC 5,8% (5,5%)

SA AUTOMOTIVE EXPORTS

PROFITABILITY 1999-2004

Profit performance of light vehicle assemblers

5.8734.257

4.103

3.717

1.285

0.0790

1

2

3

4

5

6

7

Rbil

Source: TISA survey

99 02 0301 04

• Recent investments/announcements by the OEMs include the R2 billion by BMW SA, the R3,5 billion by Toyota SA and R1 billion by Ford (first USA OEM to invest in export programme) for the next generation models.

• Capital expenditure by the 8 OEMs for 2004 amounted to R2,2 billion and is projected to be R5,9 billion in 2005.

• Productive Asset Allowance applications amounted to R13 billion of which R11,2 billion approved to date

• Popular incentive packages used by automotive sector are: – the Small Medium Enterprise Development

Programme (SMEDP)– Skills Support Programme (SSP)– Foreign Investment Grant (FIG)

INVESTMENTS

Interiors: (Airbags, Center Consoles, Instrument Panels)

Engine parts/ components: ( Air-con compressors, manifolds, bottle and air-ducts and metal substrates)

Vehicles: (Expansions etc.)

Electronics: (Connectors and Terminals and on board computers)

Drive Train components: (Springs and Chassis components.)

Body parts: ( Bumpers, Glass and lights)

Aluminium components: ( Forged & die cast)

INVESTMENT PROMOTIONTargeted Areas (by product)

the dti’s INVESTMENT SERVICES

• Pre-Investment services

- Information on investing in SA and business environment

- Detailed sector information

- Providing finance to explore investment opportunities in SA

• Investment services

- Dedicated team of experts

- Deal with investor’s needs on a customised basis through a delivery sheet

• reduce the lead time• provide prompt and accurate advice

– Draw on network of specialists – Intervene on behalf of investor with other stakeholders such as other

Government Departments, Provinces and service providers– Facilitating direct government support in the form of investment incentives

• After care – ongoing contact

INCENTIVES OBJECTIVES

• To raise fixed investment in industries

• Restructure domestic industry towards international competitiveness

• Promote sustainability of recipient projects

• Create wealth, generate employment

• Reduce investment costs for small and medium investors

INCENTIVE SCHEMES

Export oriented manufacturingIDZ

Economic infrastructure projectsCIP

Target marketInfrastructure Promotion

Local and foreign investorsSIP

Foreign investors in manufacturing.

FIG

Manufacturing, Tourism, ICT, Agro-processing and Aquaculture.

SMEDP

Target Group/SectorsInvestmentpromotion

INCENTIVE SCHEMES (continued)

Training programme for recipients of SMEDP & SIP

Skills Support Programme

Manufacturing exportersExport Marketing & Investments Assistance Scheme

Partnerships of 5 or more enterprises can participate in this programme (65:35)

Sector Partnership Fund

All targeted sectors qualifies under this programme (50:50)

Competitiveness Fund

Target Group & Sectors

Competitiveness promotion incentives

OBJECTIVES

•Assistance to companies to increase their competitiveness by supporting patent registration, quality marks and product marks.

•Assistance to increase competency and skill levels of exporters by subsidising exporter readiness assessment, training and development.

•Providing marketing assistance to develop new export markets and growing export markets.

•Assistance to companies under mission support to facilitate match-making, equity, joint ventures and technical transfers.

•Assistance for the identification of new export markets through market research (PMR).

Export Marketing and Investment Assistance (EMIA)

CONCLUSION

§ Positive about future of SA automotive industry

§ SA established as value adding global player

§ Current challenges facing the industry – resilient and

innovative enough to deal with challenges and rise

to the occasion

§ Success is built upon success and prospects hold

well for the future

Contact Details

WEB ADDRESS:www.thedti.gov.za

Call Center Number:0861 843 384