Presentation on theme: "The South African Auto Component Industry"— Presentation transcript:
1 The South African Auto Component Industry Presentation by Roger PitotNAACAM
2 Structure of the Industry in SA - OEMs European vehicle manufacturers BMW, DaimlerChrysler and Volkswagen are all 100% subsidiariesJapanese and other Multinational manufacturers, Ford, Nissan, General Motors and Toyota are now also 100% or majority controlled subsidiariesAll 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 2007.2
3 The Motor Industry Development Programme (MIDP): Key Features Introduced 1995, extended to 2012, subject to review during 2006/7Duties progressively reducing to 25% CBU and 20% components by 2012, from 115% and 50% in 1994Duty-Free import of components of 27% of ex-factory price of vehicles produced locallyImport credits earned for exports, with benefits reducing - tradeableProductive Asset Allowance (PAA) for Investments – duty credit of 20% over 5 yearsMinor programme for heavy trucks and buses
4 Future Direction of the MIDP Detailed review during 2006/7 focusing on investment and production supportMinisterial assurances confirm government support through to 2020Review will take account of South Africa’s WTO obligations by replacing direct export subsidyFuture policy will support enhanced investment and production in the South African auto industry, particularly local components
5 MIDP : Industry Performance Since 1995 Significant improvement in quality and productivity. Progressive economies of scale with local platforms down from 42 to 23Affordability – New vehicle prices below inflation for 8 out of 11 yearsLarge growth in industry exports and, in recent years, significant growth in domestic marketStable overall industry employment with modest growth in specific sectorsTrade deficit has worsened in past two years due to stronger currency, higher vehicle imports
8 Component Export Destinations – 2006 Main destinations for SA component exports are the major first-world marketsGermany 29%Spain 11%UK %France %Italy 2.2%Total EU %USA 10%8
9 Component Manufacturers – Key 2006 Data The employment of the component manufacturers totals 79,000, growing at 1.5% annuallySales exceeded R56 billion (€7 bn), with 47% OE, 30% export, 23% aftermarketCapex was R2,2 billionAverage 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.
10 South Africa as a Sustainable, Low-Cost Manufacturing Base World-class, low-cost infrastructure – railways, roads, harbours, telecommunications and electricityWell-developed, efficient capital market and world class banking and financial services sectorLow manpower costs by first-world standards and abundant supply of trainable labourLow cost of factory establishment (competitive & efficient construction industry, low real estate cost)Abundant raw material availability and competitive tooling costsCompetitive and efficient ocean freight and comprehensive airline network
11 Opportunities in South Africa What?Technology transferJoint Venture production2nd-tier supplyDirect InvestmentWhy?Advantage of a sustainable, low-cost manufacturing baseProspects for above-average economic growth in medium to long termSocio-political stabilitySound macro-economic policies and targeted industry supportAcknowledged good quality of life supported by first-world financial and IT infrastructureg
12 Thank You !NAACAM is ready to assist you to participate in the South African Automotive Industry
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