About the KwaZulu-Natal automotive industry
The KwaZulu-Natal Automotive manufacturing sector is a major employer and driver of economic development. Around 20% of major automotive component suppliers are located in the region, contributing over R 7 billion towards South Africa’s total value added. The largest local vehicle manufacturer in the country, Toyota South Africa, is also located in KZN. Toyota produced 23 out of every 100 light vehicles produced in South Africa in 2015. In addition, Bell Equipment, Hino and MAN Truck & Bus, as well as Toyota also assemble medium and heavy vehicles in the province. Total direct employment for the automotive industry amongst the motor manufacturers and component suppliers is over 20,000.
The vision of the KwaZulu-Natal automotive industry is to grow its sales, employment and manufacturing value added in support of Government’s objective of having 1.2 million vehicles produced in South Africa by 2020. This requires a near doubling of local production over the next five years, with the support of the South African and KwaZulu-Natal auto component sector vital to achieving this.
To support the growth of the South African automotive industry, the sector focuses on improving its cost competitiveness and value added services to both the regional OEM and largest light vehicle manufacturer, Toyota SA, as well as the other OEMs, and for the region to continue to expand its support for the development and growth of the national automotive industry.
Vehicle production in South Africa
South Africa represents the largest domestic market for vehicles in Africa, and is the continent’s biggest producer. South Africa’s trade environment opened up rapidly in the early 1990s as the country integrated into the global economy after years of isolation.
The South African automotive industry is comprised of seven major vehicle assemblers, thirteen assemblers of heavy and medium commercial vehicles, and approximately 360 component manufacturers. The value chain is primarily driven by the seven OEMs, BMW, Nissan, Ford, Volkswagen, General Motors, Mercedes-Benz, and Toyota, and is clustered into four primary geographic areas, each home to one or more OEM:
KwaZulu-Natal (primarily Durban, but also Pietermaritzburg) is home to Toyota’s assembly plant, South Africa’s largest producer of vehicles, and approximately 20% of the automotive components industry.
East London is the residence of Mercedes Benz’s assembly plant and roughly 6% of the automotive components industry.
PORT ELIZABETH/ UITENHAGE
Port Elizabeth/Uitenhage is home to General Motors and Volkswagen, and about 30% of the automotive components industry.
Gauteng has the largest concentration of automotive manufacturing in South Africa, with three OEMs (BMW, Ford and Nissan) and approximately 40% of the South African automotive components industry.
In addition to the 7 passenger and LCV producers, there are 13 locally based assemblers of heavy and medium commercial vehicles (M&HCVs) (as depicted in the accompanying table). The OEMS are surrounded by a number of automotive component manufacturers producing a wide range of parts including catalytic converters and exhaust systems, trim, harnesses, electronics, just-in-time assemblies, bearings, shocks, filters, plugs, machined and plastic components, tyres, and toughened glass.
The South African export lead growth model came under pressure in 2009 as a result of the global economic crisis. Since then there has been growth in both export and domestic business. Over half of all vehicles produced in South Africa now exported and production volumes in 2016 are expected to increase by 7.3%, supported by export growth, as the domestic market stagnates.
The institutional environment in South Africa provides a high degree of support to the automotive and component manufacturing industry. The current automotive industry development policy is the Automotive Production and Development Programme which has four pillars aimed at supporting and developing the local industry. These include stable import tariffs, a vehicle assembly allowance, a production incentive and automotive incentive scheme. The overarching industry objective is to double vehicle production to 1.2 million units by the end of the programme’s term. Specifically, the programme will ensure the automotive sector has a greater impact on the economy and employment by increasing local component manufacturing and encouraging greater domestic sourcing.
KZN OEM Suppliers' Value Added Contribution (R-billion)*
KZN light vehicle production by OEMs in the province as % of annual total**
KZN light vehicle exports by OEMs in the province as % of total exports**
*Source: Automotive Production and Development Programme Administration System (AAS)
**Source: South Africa Automotive Export Manual