The Automotive Industry
South Africa’s automotive industry is a global, turbo-charged engine for the manufacture and export of vehicles and components. Many of the major multinational firms use South Africa to source components and assemble vehicles for the local and international markets.The sector is one of South Africa’s most important, contributing at least 6% to the country’s GDP and accounting for almost 12% of South Africa’s manufacturing exports, making it a crucial cog in the economy. In 2010, 271 000 vehicles were exported.More than 28 000 people are directly employed in automotive manufacturing, with 65 000 employed in the component manufacturing industry. About 200 000 are employed in retail and aftermarket activities, with 6 600 employed in the tyre manufacturing industry.
With its ability to link throughout the economy, the government has identified the automotive industry as a key growth sector. It already exhibited significant growth under the Motor Industry Development Programme (MIDP), doubling in size since 1994.Its successor, the Automotive Production and Development Programme, which will be implemented from 2013, aims to stimulate the expansion of local production to 1,2- million vehicles a year by 2020 while significantly increasing local content at the same time.
The automotive and components industry is well placed for investment opportunities. Vehicle manufacturers such as BMW, Ford (incorporating Mazda), General Motors, Mercedes Benz, Nissan, Renault, Toyota and Volkswagen have production plants in South Africa, while component manufacturers such as Arvin Exhaust, Bloxwitch, Corning, Senior Flexonics have established production bases here.The industry is largely located in two provinces, the Eastern Cape (coastal) and Gauteng (inland). Companies with production plants in South Africa are placed to take advantage of the low production costs, coupled with access to new markets as a result of trade agreements with the European Union and the Southern African Development Community free trade area. Opportunities also lie in the production of materials (automotive steel and components).
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