South Africa - Automotive South Africa - Automotive
Overview
| 2017 | 2018 | 2019 (estimated) | 2020 (estimated) | |
| Total Market Size | 37.57 | 38.10 | 39.20 | 39.35 |
| Total Vehicle Production (in units) | 601,338 | 610,854 | 611, 404 | 612,004 |
| Total Exports | 12.39 | 13.52 | 13.54 | 13.59 |
| Total Imports | 15.66 | 16.57 | 16.52 | 16.53 |
| Imports from the U.S. | 0.92 | 0.97 | 0.98 | 1.0 |
| Exchange Rate: 1 USD | 13.31 | 13.22 | 14.14 | 14.14 |
Note: Above figures are estimates obtained from the National Association of Automobile Manufacturers of South Africa (NAAMSA) and represent the South African Automotive Industry
as follows:
- Total market size represents new and used vehicle sales, workshop revenue, spares,
- Total exports represent the total value of both components and vehicles.
- Total imports represent the total value of imports of both components and new
- Imports from the United States also reflects the value of components and new vehicles.
Market Overview
The automotive sector in South Africa is the mainstay of the national industrial base and accounts for 6.8% of GDP (4.3% manufacturing and 2.5% retail). South Africa improved its global ranking to 22nd (24th in 2014) in the world with a production market share of 0.68%. The automotive industry therefore represents an increasingly important strategic and catalytic role in the overall South African economy by impacting directly on many important economic policy goals, such as contribution to GDP, employment, skills development, economic linkages, technology and innovation, and making significant contributions to the fiscus through taxes, and substantial foreign direct investment.The value of exports to NAFTA in has seen a decline from $1.66 billion in 2017 to $836 million. The reason for the decline in automotive exports could mainly be attributed to the decline in vehicle exports to the U.S. in 2018. Vehicle exports to the US in 2018, at 11 440 units, were down by 28 974 units from the 40 414 units exported in 2017. Exports comprised mainly of the left-hand drive BMW 3-series, as well as smaller volumes of the new generation Mercedes-Benz C-Class and the Ford Ranger. However, the BMW 3-series was replaced by the X3 model in South Africa in 2018 which is also being manufactured in the U.S., and therefore not exported from South Africa to the U.S. anymore.
The total automotive revenue in the ambit of the automotive business sphere in South Africa amounted to $38.1 billion in 2018 compared to $37.57 in 2017. Exports of automotive products in 2018 accounted for $13.52 billion, equating to 14.3% of total South African exports. As the largest manufacturing sector in the country’s economy, vehicle and component production accounted for 29,9% of South Africa’s manufacturing output in 2018. In addition, investments by the seven major OEMs in the country amounted to a further substantial $545 million in 2018, along with the investment of $265 million by the automotive component suppliers
In 2018, 72,6% of passenger cars sold in South Africa were imported. An important aspect of the South African automotive industry is the relationship between imports and domestic production as governed by the automotive policy regime in South Africa. The previous Motor Industry Development Plan (MIDP) and the current Automotive Production Development Program (APDP) encourage domestic OEMs to manufacture high volumes of selected models linked to export contracts to obtain economies of scale, coupled with low-volume models imported to complement domestic market mixes. The OEMs and independent vehicle importers can offset vehicle and original equipment component import duties through duty rebate mechanisms that have been structured to support both the competitiveness and sustainability of the domestic automotive industry.
Several top U.S automotive component suppliers are represented in South Africa, including Johnson Controls, Lear, TRW Automotive, Tenneco, Federal Mogul, Delphi, Visteon, and ArvinMeritor, amongst others. All these companies have built strong business links between their South African operations and other international stakeholders. These established business links enhance the potential for mutually beneficial trade between the United States of America and South Africa. The percentage increase in automotive exports from 2001 (when AGOA commenced) to 2013 equaled 306.8%. The percentage increase of automotive exports from the United States to South Africa was 321.9% during the same time frame.
Original equipment manufacturers (OEMs), official dealers, and repair specialists work closely together to provide maintenance and repair services. They cooperate to ensure warranty service, driver safety, environmental protection, spare parts availability, and information about technical improvements. The broader South African automotive industry incorporates the manufacture, distribution, servicing, and maintenance of motor vehicles and components. In terms of the trade which supports this industry, there are approximately 4,600 garages and fuel stations (with the majority having service workshops as well) plus a further 1,898 specialist repairers; 1,374 new car dealerships holding specific franchises; an estimated 1,696 used vehicle outlets; about 292 vehicle component manufacturers, together with about 150 others supplying the industry on a non-exclusive basis; 1,508 specialist tire dealers and re-treaders; 483 engine re-conditioners; 167 vehicle body builders; 2,907 parts dealers; and around 220 farm vehicle and equipment suppliers.
Automotive Policy
The Automotive Production Development Program (APDP) replaced the export-oriented Motor Industry Development Program in 2013 with the aim of stimulating local production of automotive components while maintaining the incentives for OEMs to manufacture passenger cars and light commercial vehicles in the country for export and the local market. One of the attractions of South Africa’s automotive policy over the past two decades has been its long-term vision and consistency. The APDP has reinforced policy certainty, which is critical for the industry to make long-term investment decisions. The APDP’s focus is on raising local value addition to enhance the automotive industry’s manufacturing output and export competitiveness. The automotive sector relies heavily on the additional economies of scale provided by exports and competitiveness is critical to its success.
Market Trends
In 2018, global vehicle production declined by 1,1% to reach 95,6 million vehicles, down from the 96,7 million units produced in 2017. The weaker performance could mainly be attributed to the 2,04 million units, or 2,8%, decline in passenger car production from the 72,72 million produced in 2017 to the 70,68 million produced in 2018. South Africa is regarded as a global tier 2 player, and forms part of the group of countries producing below one million vehicles per annum. South African vehicle production increased by 1,6% to 610 854 units in 2018 from the 601 338 units in 2017, supported mainly by record vehicle exports. In terms of global LCV production, South Africa was ranked 15th with a market share of 1,24%, while with regards to global passenger car production, the country was ranked 26th with a market share of 0,46% in 2018. South Africa remained the dominant market on the African continent and accounted for 54,3% of total vehicle production in Africa.
Industry trading conditions remained intensely competitive with over 55 brands and 2,872 model derivatives in the new car and light commercial vehicle sectors, competing for consumers. The vehicle-ownership ratio in South Africa is in the order of 178 vehicles per 1,000 persons.
Sub-Sector Best Prospects
The countries of origin for new passenger cars and commercial vehicles were among the main countries of origin for aftermarket parts imports. Imports from the traditional markets such as Germany, the United States, and the United Kingdom have declined over recent years, while imports from China have increased. Despite the decline, the United States is still South Africa’s third highest sourcing country of replacement parts after Germany and China.In 2018, imported passenger cars accounted for 72,6% of the total passenger car market in South Africa, as a brand conscious, consumer-driven market prompted the widest choice of new passenger cars to market size ratio in the world. The growing variety of models and ever more complex technologies have therefore led to an increasing number of aftermarket parts in the market. The growth of inexpensive products, imported mainly from China, has exacerbated this trend. The import of replacement parts increased from $4.46 billion in 2017 to $4.64 billion in 2018. Top four countries of origin for aftermarket parts imported are China, Germany, U.S. and Japan.
The main automotive imports from the United States to South Africa are: light vehicles; OE components; engine parts; engines; transmission shafts/cranks; gauges/instruments; axles; tires; and automotive tooling.
In addition, there has been a rapid growth in demand for automotive aftermarket specialty equipment and accessories in South Africa. In the last nine years accessorizing and improving performance of vehicles has transformed from a hobby to a fully-fledged culture of fierce competition. In the race to individualize and distinguish their vehicles from others, enthusiasts constantly seek innovative, authentic specialty components and accessories with little regard to price. In this lucrative segment, South Africans are highly receptive to U.S. brands and often follow trends set in the United States.
The following performance products are sought after by dragsters in “the race to be the best”: intercoolers; ball bearing turbos; octane boosters; gauges; racing bolts; performance water injection systems, high flow injectors; racing clutches; metal head-gaskets; racing tires, nitro fed boosters, racing pistons; calipers and racing disk kits; high pressure fuel kits; gas flow cylinder heads; and dynamometers.
A constant need to distinguish and individualize vehicles creates opportunities for U.S. suppliers of automotive interior and exterior accessory products such as body styling kits; racing seats; alloy wheels; suspension-lowering kits; graphics; steering wheels; gear and hand-brake pouches; boot spoilers and wings; aluminum pedals; and xenon light kits.
Opportunities
South African specialty equipment and accessory wholesalers and retailers constantly seek to expand their product range and welcome opportunities to establish distributor/agent agreements with U.S. firms. Most of the performance products are imported directly from the United States, United Kingdom, Italy, and Germany. However, these imports may not necessarily be purchased from the manufacturer or with any exclusivity and/or distributor agreements. This scenario leads to “rogue distributors” and fierce competition amongst wholesalers and smaller retail-customizing and performance shops. South African companies are interested in acquiring U.S. distributorships, however, either U.S. companies do not reply to their inquiries, or the U.S. company’s minimum requirement to ship is too large for the South African importer. This leaves the South African importers without much choice but to engage U.S. agents who consolidate and ship U.S. specialty products that are purchased from “third parties.”South African aftermarket importers and wholesalers often attend international exhibitions such as SEMA, AAPEX, Performance Racing Industry, and Automechanika to meet and partner with foreign companies not represented locally.
Web Resources
National Association of Automobile Manufacturers of South AfricaWebsite: www.naamsa.co.za
National Association of Automotive Component
and Allied Manufacturers (South Africa)
Website: www.naacam.co.za
The Department of Trade and Industry South Africa
www.thedti.gov.za
For More Information, the U.S. Commercial Service, South Africa can be contacted via e-mail at: Jaisvir.Sewpaul@trade.gov; Phone: +27 21 702 7379; Fax: +27 21 702 7402, or visit our Website at www.export.gov/southafrica.
$ billions Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.