automotive export manual 2011

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South AfricaAUTOMOTIVE

Export Manual

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Produced and compiled byAIEC

P O Box 40611Arcadia

0007Tel: +27 12 323 2980Fax: +27 12 326 3232

Website: www.aiec.co.za

CONTENTS

Page

Foreword .............................................................................................................................................................................................4

The Automotive Industry Export Council (AIEC) ...................................................................................................................5

South Africa – the country ............................................................................................................................................................7

South Africa – comparative advantages ..................................................................................................................................8

The South African automotive industry operating environment ................................................................................ 12

Automotive clusters ..................................................................................................................................................................... 13

Made in South Africa .................................................................................................................................................................... 15

Automotive industry trade balance ....................................................................................................................................... 21

Exports – methodology .............................................................................................................................................................. 23

Exports to regions ......................................................................................................................................................................... 24

Exports to countries ..................................................................................................................................................................... 40

Trade and investment opportunities ..................................................................................................................................... 44

Exports of vehicles ........................................................................................................................................................................ 47

Automotive components – exports ....................................................................................................................................... 49

Imports by country of origin ..................................................................................................................................................... 64

Imports of vehicles ....................................................................................................................................................................... 66

Parts and components – imports ............................................................................................................................................ 68

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Main automotive trading partners ......................................................................................................................................... 70

Types of co-operation .................................................................................................................................................................. 74

General information ..................................................................................................................................................................... 75

South African automotive industry – opportunities and challenges ......................................................................... 76

Key automotive industry addresses ....................................................................................................................................... 77

ABBREVIATIONS

AGOA African Growth and Opportunity Act

AIEC Automotive Industry Export Council

BRICS Brazil, Russia, India, China and South Africa

CBU Completely Built Up

CKD Completely Knocked Down

COMESA Common Market for Southern and Eastern Africa

CPI Consumer Price Index

DTI The Department of Trade and Industry

EAC East African Community

EU European Union

GDP Gross Domestic Product

MERCOSUR Mercado Común del Sur - Common Market of South America

MIDP Motor Industry Development Programme

NAACAM National Association of Automotive Component and Allied Manufacturers

NAAMSA National Association of Automobile Manufacturers of South Africa

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NAFTA North American Free Trade Area

OEM Original Equipment Manufacturer (Vehicle Manufacturer)

PPI Producer Price Index

SADC Southern African Development Community

SARS South African Revenue Service

FOREWORD

AUTOMOTIVE EXPORT MANUAL2011 – SOUTH AFRICA

The Automotive Export Manual – 2011 – South Africa publication represents a follow up and update of the 2007, 2008, 2009 and 2010 Automotive Export Manual publications produced and compiled by the Automotive Industry Export Council (AIEC) – the key source of automotive trade data to the industry in South Africa. The 2011 publication represents a detailed guide on the export and import performance of the South African automotive industry under the Motor Industry Development Pro-gramme (MIDP). The aim of the manual is to identify and prioritise the major automotive export des-tinations, the major countries of origin, the main automotive export trade blocs, the most important exported and imported automotive components, the top growth markets and products as well as the impact of the trade arrangements enjoyed by South Africa.

Interesting features in the 2011 publication include the focus on the BRICS countries following South Africa’s joining of this significant economic coalition in 2011. India, China and Russia represented three of the 33 countries to which the South African automotive industry’s exports more than doubled

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in 2010 compared to 2009. Although the automotive trade balance remains in favour of the other BRICS countries, trade and investment opportunities for the domestic automotive industry would be enhanced in the foreseeable future via its exposure being part of the coalition. In view of the priority focus on Africa for South African automotive exporters the potential opportunities via the proposed 26-country SADC-EAC-COMESA free trade area are also explored.

Following the financial and subsequent economic crisis in 2009, the South African automotive indus-try recovered well in 2010 in line with improvements in the global automotive industry. The two-speed global recovery, with the developed countries reflecting mild economic recovery and developing countries performing strongly, is evident in the automotive trade performance of the South African automotive industry. As an export-oriented industry dependant on exports in order to obtain viable volumes, global economic developments have been and will remain an important consideration im-pacting on the domestic automotive industry’s performance.

The Automotive Industry Export Council (AIEC)

The AIEC is operated from the NAAMSA offices in Pretoria and the activities and administration are coordinated by the AIEC Board. The AIEC Board consists of Mr Roger Pitot (Executive Direc-tor – NAACAM – Chairperson), Mr Nico Vermeulen (Director – NAAMSA), Dr Norman Lamprecht (Executive Manager – NAAMSA) as well as two ex-officio members from the Department of Trade and Industry, Mr Mzwakhe Mbatha and Ms Phindile Skosana.

Vision

Mr Roger PitotExecutive Director

NAACAM

Dr Norman LamprechtExecutive Manager

NAAMSA

Mr Nico VermeulenDirectorNAAMSA

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The vision of the AIEC is to ensure improved international competitiveness and, for the automotive sector as the leading manufacturing sector in South Africa, to upgrade its own export value chain as well as cross cutting value chains to make a bigger contribution to the economic growth and employ-ment levels of the country.

General

The South African automotive industry enjoys significant advantages compared with many other exporting countries. Its flexibility in producing short runs, abundance of raw materials combined with the expertise, advanced technology and established business relationships of parent companies ensures that the South African industry increasingly adds value to the global strategies of parent companies. South Africa is also an ideal location for specific R&D, such as technologies for rugged or tropical conditions. Further advantages include expertise in electronics arising from the defense industry and metallurgy as a result of the country’s extensive mining and metals know-how.

Both the range, in respect of the diversity of automotive components, and reach, in respect of the number of destinations of automotive exports, are increasing. The South African domestic market generally is not large enough to generate sufficient economies of scale for world-class production; hence, exporting needs to be viewed as a necessary step in the rapid movement towards interna-tional competitiveness. Failure to rise to the challenge by finding new markets and products could result in stagnation of exports. The current global economic environment is dominated by intense competition for export markets, investment and technology. This makes it important to gain and maintain access to these markets.

The Automotive Industry Export Council (AIEC) was established at the end of 1999. The purpose was to provide a cost effective administered central body to assist companies in the automotive sector that are currently exporting, may be interested in exporting in future, or may become capable of exporting in future. The end result of the AIEC activities will be to broaden the export base by bringing in more companies that export directly in their own right or by being suppliers to exporting companies. In addition, the objective is to increase the value of exports of automotive products.

The AIEC represents the interests of eight motor vehicle exporters/manufacturers, namely BMW, Ford (incorporating Mazda), General Motors, Mercedes Benz, Nissan, Renault, Toyota and Volkswa-gen as well as exporters/manufacturers of trucks and buses, and over 400 component suppliers in South Africa.

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Export Councils are the prime delivery vehicles that stimulate export growth and deepen the export base. This format was initiated by Trade and Investment SA in a number of key sectors, and is also aimed at assisting Small Medium and Micro Enterprises (SMMEs) and Black Economic Empower-ment (BEE) companies to enter the export market successfully.

Customer/Stakeholder Portfolio

The customers and stakeholders of the AIEC are all the domestic automotive industry stakeholders as well as Dti Head Office, Dti foreign economic representatives, and global players abroad. The needs of members are primarily twofold, namely: (i) research and information, and (ii) practical as-sistance with exhibitions and missions. These needs form the basis for the assistance provided.

More information on the Automotive Industry Export Council can be accessed at www.aiec.co.za.

SOUTH AFRICA – THE COUNTRY

South Africa is regarded as one of the most sophisticated emerging markets globally. It is the world’s 26th-largest country by population, the 24th-largest by land area, has the 34th-largest labour force, is the 19th-largest global producer of electricity, has the 18th-biggest road network in the world, and has the 15th-longest network of railway tracks. The country occupies the southernmost part of the African continent and shares boundaries with Namibia, Botswana, Zimbabwe, Mozambique, Swa-ziland and Lesotho. The country has a population of 49,99 million people with 11 official languages, although English is the most spoken medium to conduct business with. South Africa consists of nine provinces, namely Western Cape, Eastern Cape, Northern Cape, North West, Free State, KwaZulu-Natal, Gauteng, Mpumalanga and Limpopo, each with its own legislature, premier and provincial members of executive councils. The administrative capital is Pretoria in Gauteng, the legislative capital is Cape Town in the Western Cape and the judicial capital is Bloemfontein in the Free State.

Key Indicators – 2010

2010

GDP R2 662,8 billion (at current prices)

Automotive industry’s contribution to GDP 6,17%

GDP Growth rate 2,8%

GDP per capita R53 117

CPI (annual average) 4,3%

PPI – manufacturing (annual average) 1,9%

Total export value R584,0 billion

Main export destinations China, USA, Japan, Germany, UK

Main commodities exportedGold, bituminous coal, iron ore, platinum, ferro-chromium, vehicles

Total import value R585,4 billion

Main countries of origin China, Germany, USA, Japan, Saudi Arabia

http://www.aiec.co.za

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Main commodities importedPetroleum oils, original equipment automotive components, aviation spirit, vehicles, telephones for cellular networks

Automotive exports as % of total SA exports 11,9% (R69,5 billion)

Automotive imports as % of total SA imports 17,1% (R100,2 billion)

Source: South African Reserve Bank, Statistics South Africa, South African Revenue Service

South Africa is the economic powerhouse of Africa, leading the continent in industrial output and mineral production and generating a large proportion of Africa’s electricity. The country has abundant natural resources, well-developed financial, legal, communications, energy and transport sectors, a stock exchange ranked among the top in the world, and a modern infrastructure supporting efficient distribution of goods throughout the southern African region. Not only is South Africa an important emerging economy, it is also the gateway to other African markets. Its well-developed road and rail links provide the platform and infrastructure for ground transportation deep into Africa. The country plays a significant role in supplying energy, relief aid, transport, communications and investment on the continent.

SOUTH AFRICA – COMPARATIVE ADVANTAGES

South Africa is ideally positioned for easy access to the countries of the Southern African Customs Union (SACU) and the Southern African Development Community (SADC), which consist of 15 countries with a total population of 200 million. The country’s major strengths include its physical and economic infrastructures, natural mineral and metal resources, a growing manufacturing and services sector and potential to develop a strong tourism industry. South Africa is regarded as one of the most diversified exporters in the world and its increasing trade liberalisation is contributing significantly to the country’s growth and future prosperity. The country’s main comparative as well as automotive industry’s main competitive advantages in-clude the following:

Infrastructure

South Africa already has one of the best infrastructure and service industries among developing na-tions, particularly in roads, telecommunication, harbours, banking systems, insurance and shipping. It is able to function as a hub for commercial traffic emanating from and destined for Europe, Asia, the Americas as well as the east and west coasts of Africa. With the biggest rail service, the largest airline and the most developed road infrastructure in Africa, South Africa is also regarded as the gateway into the continent. Infrastructure development is regarded as vital to lowering the cost of doing business in South Africa. • Spoornet, a division of Transnet, runs the biggest rail service in Africa, with 20 872 km of line.

Largely electrified, the network extends into neighbouring countries offering a logistical launch pad into the continent.

• South African Airways (SAA) is the largest airline in Africa and as part of the Star Allianceserves 503 cities and provides maintenance for 47 of the world’s major airlines. OR Thambo International Airport is the largest air cargo port in Africa.

• The country’s banks dominate the financial services sector in Sub-Saharan Africa, holding the

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first five positions in regional rankings. • Leader of information and communication technology development in Africa with a telecom-

munications network that is 99% digital, and includes the latest in fixed-line, wireless and satel-lite communication. The GSM cellular phone market is the third fastest growing mobile phone market in the world.

Raw material availability

South Africa has an abundance of raw material availability and is the world’s top ranked producer of platinum, palladium, rhodium, chrome, manganese, vanadium, vermiculite, ferro-chromium and alu-mino-silicates. In terms of global reserves and production of minerals, holds 90% of platinum-group metals, 80% of those of manganese, 73% of chrome, 45% of vanadium and 41% of gold reserves. Only two strategic minerals namely, crude oil and bauxite, are not available in the country. South Africa has a high level of technical expertise, comprehensive research and development activities and boasts world-class primary processing facilities for gold, platinum, carbon steel, stainless steel and aluminium. Platinum group metals, including platinum, rhodium and palladium, are essential elements in the catalytic converter, which makes the country a strategic long-term supplier of these products. South Africa currently supplies in the order of 15% of the global demand for catalytic converters. The country is also home to over 70% of the world’s chromium, which is an essential ingredient in the stainless steel used to house the catalyst and produce modern auto exhausts. This resource base produces in excess of 50% of the world’s ferrochrome and has prompted the devel-opment of Columbus Stainless, one of the largest and most modern integrated stainless steel works in the world.

Emerging market cost advantages

South Africa has a mixed developed and emerging world economy offering cost advantages in many areas. In terms of the cost of living index, South Africa is ranked as one of the lowest cost countries in the world to live in. Average labour costs to the employer are also lower than developed nations and on par with many developing nations.

First world production testing

South Africa’s unique range of vehicle operating conditions coupled with some sophisticated re-search and development resources are now recognized around the world for providing low-cost vehicle testing and development opportunities. Operating conditions include varying and readily ac-cessible climate conditions, altitudes and road surfaces from high-speed circuits, off-tracks, baking deserts to cold mountains. Accelerated durability testing can be carried out at all times of the year, all within easy reach of laboratories and testing services available at some of the lowest prices in the world.

Flexible production capability

The South African automotive industry has retained its capability where single production facilities manufacture a range of quality products at competitive prices to satisfy the domestic and export markets. Given this flexibility, South Africa has a unique competitive advantage when it comes to low volumes, such as the case with lower volume vehicles and niche markets or at model run-out, compared to other countries where production is set up for long high-production runs.

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Government support

The Motor Industry Development Programme (MIDP) was implemented with effect from 1 Septem-ber, 1995 to reshape the future direction of the South African automotive and associated industries. The MIDP took account of the international realities facing the motor industry in South Africa, namely, trade liberalisation, globalisation of markets against the background of rapid technological change, rising customer expectations and markets which were becoming increasingly demanding and fast moving in terms of fashions and trends. The MIDP was established to entrench the outward orien-tation of the industry, thereby restructuring it to achieve international competitiveness, whilst at the same time maintaining its employment and output contributions to the South African economy.

The new Automotive Production Development Programme (APDP) (to be introduced in 2013), which aims to double vehicle production to 1,2 million units by 2020 with an associated increase in locali-sation, will reflect a quantum leap in terms of processes, technologies and the scale on which the domestic industry currently operates. The APDP would seek to shift the emphasis away from an export focus to one that emphasises scale in the production of vehicles. In addition the programme is intended being supportive of the further development of world-class automotive component manu-facturing.

The key elements of the APDP from 2013 through 2020 may be shown a follows.

APDP key elements

YEAR CBU RATE

CKD RATE

VEHICLE ASSEMBLY

ALLOWANCE(Plant Volume >

50 000 Units)

PRODUCTION INCENTIVE

ADDITIONAL INCENTIVE FOR VULNERABLE

SECTORS

AUTOMOTIVE INVESTMENT ALLOWANCE

% OF PROJECT VALUE OVER 3

YEARS

DISCRETIONARY ADDITIONAL INVESTMENT ALLOWANCE

2013 25% 20% 20% 55% 5% 20% 10%

2014 25% 20% 19% 54% 5% 20% 10%

2015 25% 20% 18% 53% 5% 20% 10%

2016 25% 20% 18% 52% 5% 20% 10%

2017 25% 20% 18% 51% 5% 20% 10%

2018 25% 20% 18% 50% 5% 20% 10%

2019 25% 20% 18% 50% 5% 20% 10%

2020 25% 20% 18% 50% 5% 20% 10%

The four key elements of the Automotive Production and Development Programme (APDP) include the following:

Automotive Investment Scheme (AIS): Effective from July 2009, this assistance replaces the Pro-ductive Asset Allowance and will amount to a cash grant of 20% (taxable) of qualifying investment paid over to OEMs and component manufacturers over a three year period. In addition, by achieving certain performance objectives, companies will be able to earn an additional 10%. This support will be available to encourage investments by OEMs and component manufacturers in a manner that supports equipment upgrading.

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Tariffs: Import duties on vehicles and components will be frozen at 2012 levels (25% on light ve-hicles and 20% on original equipment components) through to 2020. A preferential agreement will result in imported vehicles from the EU paying only 18% duty. These tariffs are meant to provide just enough protection to justify continued local vehicle assembly.

Vehicle Assembly Allowance (VAA): This support will be in the form of duty-free import credits is-sued to vehicle assemblers based on 20% of the ex-factory vehicle price initially, reducing to 18% of the value of light motor vehicles produced domestically from 2013. The equivalent value of this to the OEMs will be the allowance multiplied by the duty rate, so 4% in 2013 reducing to 3,6% in 2015. This support is effectively providing a lower duty rate for local vehicle assemblers and should provide enough encouragement for high volume vehicle production in line with the target of doubling production.

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Production Incentive (PI): From 2013 this support will start at 55% reducing progressively to 50% of value added, also in the form of duty-free import credits, and will replace the current export based scheme. There will be an additional 5% for ‘vulnerable sectors’. The equivalent value will be the in-centive multiplied by the component duty rate, so 11% of value added in 2013, reducing to 10% by 2018. Value added had not yet been clarified at publication date, but it has been defined in simple terms as the manufacturer’s selling price less input materials. The incentive will flow through the supply chain to the end producer, which will be the vehicle assembler or, in the case of component exports or replacement parts, the component manufacturer. The value-add support is planned to encourage increasing levels of local value addition along the automotive value chain with positive spin-offs for employment creation.

The full details of the Automotive Production and Development Program (APDP) have not yet been finalised. This program applies to light vehicles only. Government is presently also examining op-portunities for a programme to support future heavy vehicle production.

THE SOUTH AFRICAN AUTOMOTIVE INDUSTRY OPERATING ENVIRONMENT

The global automotive industry is a key sector of the economy for every major country in the world. Manufacturing vehicles requires the employment of about 9 million people directly in producing the vehicles and the automotive components that go into them. This comprises over 5% of the world’s total manufacturing employment. Many people are also employed in automotive related manufactu-ring and services as the sector uses the goods of many industries including steel, iron, aluminium, glass, plastics, carpeting, textiles, computer chips and rubber, amongst others. It is estimated that each direct automotive job supports at least another 5 indirect jobs, resulting in more than 50 million jobs globally owed to the automotive industry.

The global automotive industry structure consists of a supply side (production) and a demand side (sales). The attempts by the key role-players in the supply-side to meet the needs of the demand side find expression in the major global trends and developments governing the global automotive industry. The global automotive industry is experiencing the effects of change in an accelerated way due to the globalisation of production. The cost-cutting strategies by the OEMs, and as a con-sequence, their suppliers as well are fundamentally driven by certain strategic underlying major global trends. Most notably the challenges are induced by market realities and consumer demands, mergers and acquisitions, global production overcapacity, outsourcing and sourcing strategies, new technology and innovation, as well as environmental requirements. There is an increasing trend to-wards environmentally friendly products – low emission/zero emission vehicles. These realities have important implications for the automotive industry, especially in developing countries such as South Africa. Developing countries, increasingly integrated into the global automotive value chain of global role-players, not only have to cope and incorporate the direct impact of the major global trends on their operations, but also have to compete with each other for sourcing and outsourcing opportuni-ties. It is within this fast changing environment that many developing countries, such as South Africa, are seeking to create for themselves a role as producer of vehicles and automotive components. When the domestic market is not large enough to absorb the production, the focus is on exports.

Since the implementation of the MIDP in September 1995 the South African automotive sector has grown in stature to become the leading manufacturing sector in the country’s economy. The sector’s

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contribution to the country’s Gross Domestic Product (GDP) of R2 663 billion in 2010 amounted to 6,2%. A compounded annual growth rate of 20,6% in rand value terms for completely built-up vehi-cles (CBUs) and automotive components exports has been achieved since 1995, through to 2010. Total automotive industry exports (CBUs and components) in rand value terms increased nearly seventeen fold from the R4,2 billion in 1995 to R69,5 billion in 2010. Market acceptance for South African manufactured CBUs and automotive components is high. A total of 1 860 027 vehicles have already been exported from South Africa since 1995 up to 2010. The total nominal export value of vehicles and automotive components over this period amounted to R603 billion. The export growth has been accommodated by major investments in best practice assets and state-of-the-art equip-ment, skills upgrading, productivity gains and upgrading of the whole automotive value chain.

The MIDP facilitates the outward orientation of the domestic automotive industry through its various policy mechanisms. However, the MIDP cannot control the range of external factors impacting on the business operations of the South African automotive industry and its role-players. These include global developments, logistics costs, raw material prices, currency movements as well as admini-strative prices impacting on the cost of doing business in South Africa.

The Automotive Production and Development Programme (APDP), to replace the MIDP from 1 Jan-uary 2013 onwards, should enable vehicle manufacturers and their suppliers to plan strategically for the future and to finalise investment decisions with confidence and certainty.

Automotive clusters

South Africa’s vehicle manufacturing industry is concentrated in three of the country’s nine provinces, namely Gauteng, the Eastern Cape and KwaZulu-Natal, and in close proximity to its suppliers. How-ever, increasingly some automotive development is also taking place in the Western Cape. The three automotive clusters and the Western Cape automotive features may be illustrated as follows:

Automotive clusters – key features – 2010

Automotive clusters Gauteng Eastern Cape KwaZulu-Natal Western Cape

Capital Johannesburg Bisho Msunduzi/Pietermaritzburg Cape Town

Population (% of SA total of 49,99 million) 11,19 million (22,4%) 6,74 million (13,5%) 10,65 million (21,3%) 5,22 million (10,4%)

GDP contribution as % of SA total GDP of R2 663 billion

33,5% 7,8% 16,2% 14,5%

OEMs (manufacturing plants)

BMW SA Nissan SA

Renault SAFord Motor Company of Southern Africa incor-porating the assembly of

Mazda

Volkswagen of SA Mercedes-Benz SA General Motors SA

Toyota SA Motors -

Number of automotive component companies 164 82 84 20

Motor vehicle parc as % of SA total vehicle parc of 9,8 million vehicles

38,8% 6,9% 13,6% 16,2%

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Passenger car sales as % of total 2010 NAAMSA sales

35,8% 4,3% 12,2% 11,1%

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LCV sales as % of total 2010 NAAMSA sales 31,4% 5,0% 12,2% 9,4%

MCV/HCV sales as % of total 2010 NAAMSA sales

35,8% 4,7% 14,8% 8,7%

Light vehicle exports by OEMs in the province as % of total 2010 exports

24,5% 49,0% 26,3% -

Other key features

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Source: NAAMSA/Response Group Trendline, NAACAM, Statistics South Africa

AFRICA AND SOUTH AFRICA

MADE IN SOUTH AFRICA

The South African automotive industry, as everywhere else in the world, is strongly influenced by the OEMs. The industry’s structure and evolutionary path are therefore closely aligned with OEM strate-gies in both domestic and global markets. The increasing orientation of OEMs towards exports has thus fundamentally changed the structure of their own operations as well as those of the automotive component industry. Key decisions about South Africa’s automotive business are made in Europe, the USA and Japan. South Africa’s participation in the World Trade Organisation (WTO), its competi-tive advantages and its special relationships with the EU and other trading regions has facilitated the industry’s integration into the global sourcing strategies of the multinational automotive corporations.

Globally, flexibility is considered an essential competitive advantage for fast model changes and for successful niche marketing, both of which require an ability to use the same platform to produce low volumes in a particular model derivative. The South African automotive industry has retained its capability where single production facilities manufacture a range of products at competitive prices to satisfy the domestic and export markets.

Essentially the essence of the MIDP is to encourage the OEMs in South Africa to specialize in one or two high volume models on behalf of parent companies, obtain economies of scale benefits via exports and in turn import those low volume models not manufactured in the country to complement their domestic model mixes. This approach also assists the component suppliers in obtaining higher volumes. Consequently the “Made in South Africa” products include the following:

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Passenger cars:

BMW 3-Series 4-door

Ford Focus, Icon

Mazda Mazda 3

Mercedes Benz C-Class 4-door

Nissan Tiida and Livina/Grand Livina

Renault Sandero

Toyota Corolla 4-door and Fortuner

Volkswagen Polo new and previous series

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Light commercial vehicles:

Ford Bantam and Ranger

Mazda BT-50

General Motors Corsa Utility and Isuzu KB

Mercedes Benz Mitsubishi Triton

Nissan Hardbody, NP300, NP200

Toyota Hilux

Production of passenger car and light commercial vehicles – 2006 to 2010

PASSENGER CARS LIGHT COMMERCIAL VEHICLES

Market Exports as a % of total

Market Exports as a % of totalDomestic Exports Total Domestic Export Total

2006 215 311 119 171 334 482 35,6 159 469 60 149 219 618 27,4

2007 169 558 106 460 276 018 38,6 156 626 64 127 220 753 29,0

2008 125 454 195 670 321 124 60,9 118 641 87 314 205 955 42,4

2009 94 379 128 602 222 981 57,7 85 663 45 514 131 177 34,7

2010 113 740 181 654 295 394 61,5 96 823 56 950 153 773 37,0

2011* 130 000 210 000 340 000 61,8 110 000 90 000 200 000 45,0

* projected figuresSource: NAAMSA

In addition to the light vehicles, the following

Medium, heavy and extra heavy commercial vehicle companies are represented in South Africa:BabcockFiatFreightlinerFusoGeneral MotorsHinoIsuzuIvecoMANMercedes BenzNavistar International TrucksNissanPeugeotPowerstarRenault TrucksScaniaTataToyotaUD TrucksVolkswagen

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Volvo Trucks

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Buses:IvecoMANMercedes BenzScaniaTataVDL Coach & BusVolvo

Assembly of medium and heavy commercial vehicles and buses – 2006 to 2010

MEDIUM AND HEAVY COMMERCIALS

Market Exports as a % of total

Domestic Exports Total

2006 33 080 539 33 619 1,6

2007 37 069 650 37 719 1,7

2008 34 659 1 227 35 886 3,4

2009 18 934 831 19 765 4,2

2010 22 021 861 22 882 3,8

2011* 25 000 1 000 26 000 3,8

* projected figureSource: NAAMSA

Range of automotive components manufactured in South Africa

Abrasives Accessories Adaptor Plates

Air Bags Air Brake Systems/Components Air Ducting

Air conditioning Alternators Aluminium

Anchor Pins Armrests Audio/Navigational/Multi-Media Systems

Automotive Carpets Automotive Fasteners/Fastening Systems

Automotive Wires & Cables (Electrical)

Axles Badges/Chevrons/Emblems/Graphics/3-D Trim

Ball Joints

Batteries Bearings Blow Moulded Components

Body-in-White Tooling Bonding/Adhesive Systems Brackets

Brakes Brass Fittings/Components Bullbars

Bumpers Bushbars Bushes – Small End

Business Services/Solutions Cables Cams

Canopies/Trim Parts/Rubber Seals Caps Carpets

Castings and Forgings Catalytic Converters Clamps

Clutches Coatings – Specialised/Protective Cockpit/Module Assemblies

Coils – Condenser/Evaporator Condensers Connection Rods

Consoles Control Alarms Cooling Fans/Cooling Module Assemblies

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Corrosion Protection Cotter Tensioners Covers – Seat

Crankshafts Cylinder Blocks/Heads/Covers Cylinders

Dashboards/Instrument Panel Braces Decoiling Deflectors

Die Coating Differentials Doors

Drive Shafts & Components E-Coatings Electro-Phoretic Painting

Electronics Emission Control Systems Engine

Engine Cooling Engineering Services Exhausts

Fenders Fifth Wheels Components Filters

Filtration – Bulk Fine Blanked Metal Pressings Flanges

Flywheel/Housings/Assemblies Foam Front End/Module Assemblies

Fuel Gaskets Gauges – Tyre Pressure

Gearboxes Gears General/Specialised Engineering

Glass Glove Boxes Graphics/3-D Trim

Grilles & Grille Guards Grommets/Plugs Handbrakes

Harnesses Headlamps Headrests – Conventional/Pour-in-Place

Heat Exchangers/Casings Heat Shields Hinges

Hooters Hoses Hvac Systems

Hydraulic Hose/Fittings Ignition Impregnation Solutions

Induction Heaters Injection Moulded Parts Instrumentation & Panels

Intake Pies/Ducts Intake/Inlet Manifolds J Bolts

Jacks – Scissors/Cantilever/Dome Kingpins/Link Pins/Idler & Pitman Arms Knuckles

Leather/Plastic/Vinyl Licence Disk Holders Lighting

Liners Linings Load bins

Lock bolts Locking Mechanisms – Door/Hood/Trunk Lid

Manifolds

Marking/Marking Equipment Mats – Various Metrology – 3D Measurement

Mirrors Motors Moulded Insulation Components/Panels

Mouldings – Body Side/Door Panel/PU Mud Flaps/Stone Guards Nudge Bars

Number Plate Holders/Panels Nuts & Bolts Oil Coolers

Oil Seals Oil/Grease/Lubricants Paint Finishing Systems

Panels Parcel Shelves/Trays Pedal Boxes

Pedal Pads Pipes/Hoses/Pipe Bending/Hose Clamps/Pipe Assemblies

Pistons & Piston Assemblies

Plastics Pneumatic Equipment Porosity Solutions

Post Covers Powder Coating Pressed Metal Parts

Profiles Propshafts/Propshaft Assemblies/Components

PU Parts – Metal Reinforced

Pulleys/Belt Drives/Components Punching Equipment Radiators

Radio Mounting Components Rail blocks Ratchets

Raw Materials Reflectors Rivets/Riveting Tools

Robot Welding Cells Robotic CO2 Welding Robotics

Roll Bars/Roll Bar Brackets Roll Linings/Rail blocks Roof Rails

Rotors Rubber Safety Belts/Components

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Sealants Seats Shackle Pins/Bushes

Shock Absorbers/Gas Lifts Shrouds Side Steps/Rear Steps

Sintered Metal Components Sleeves Sound Deadeners/Insulators

Spark Plugs/Glow Plugs Speakers/Housings/Trim Spindles

Spline Shafts Spoilers Springs

Stabilisers/Torsion bars Stainless Steel Steel

Steering Stiffener Plats Stone Guards

Stone Protection Coatings Storage & Packaging Structural Body Components

Struts Struts & Strut Cartridges Sun Visors

Surface Finishing – De-burring/De-scaling/Polishing

Suspension Units/Components/Assembly

Switches

Tailboards Thermostats Tie Rods/Tie Rod Ends

Timing Chains/Components Tool & Die Makers Tools

Torsion Bars Tow Bars/Tow Hooks Towing Accessories

Tube Manufacture Tyres Under Shields/Covers

Vacuum Formed Products/Assemblies Valve Guides Valves/Valve Seat Inserts

Vehicle Security Ventilation Systems Vinyl

Washers Water Pumps/Inlet Manifolds Welded Assemblies

Wheels Winches Window Regulators/Winders

Windscreen Washer Bottles Wipers – Arms/Blades/Linkages Wiring Harnesses

The table of the major automotive component exports is on p50.

AUTOMOTIVE INDUSTRY TRADE BALANCE

The South African automotive industry’s trade deficit has widened to R30,7 billion in 2010 compared to the R18,9 billion in 2009. The overall picture in respect of the domestic automotive industry’s trade balance under the MIDP reflects that exports have increased very rapidly but that imports have expanded rapidly as well. Since the introduction of the MIDP, until 2007, automotive component exports remained the key driver behind the automotive industry’s trade balance. In 2008, owing to the record vehicle exports of 284 211 units, the vehicle export value exceeded the automotive com-ponent export value for the first time and this trend continued into 2010.

Despite the significant increase in exports of CBUs and automotive components in recent years, the South African automotive industry has remained a net user of foreign exchange. This was as a result of the importation of products not manufactured in the relatively small domestic market. Capital-intensive components such as engines, gearboxes and interior electronic components are mainly imported and the remainder sourced in the domestic market. The industry’s reliance on global designs, technologically sophisticated plant and machinery and high-value automotive components contributes to the large outflow of foreign exchange. In addition, the importation of replacement parts has increased substantially in recent years to support the increased vehicle imports.

Trade balance for the automotive industry

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Year Imports (R billion) Exports (R billion) Net forex usage (R billion)

2005 72,5 45,3 (27,2)

2006 88,5 54,7 (33,8)

2007 102,2 67,6 (34,6)

2008 108,9 94,2 (14,7)

2009 79,9 61,0 (18,9)

2010 100,2 69,5 (30,7)

2010 100,2 69,5 (30,7)

EU 50,9 33,1 (17,8)

NAFTA 6,2 16,5 10,3

AFRICA (incl. SADC) 0,1 8,7 8,6

MERCOSUR 3,6 0,9 (2,7)

OTHER 39,4 10,3 (29,1)

2010 100,2 69,5 (30,7)

CBUs 35,0 38,7 3,7

Original equipment components Aftermarket components

37,930,8 (34,4)

27,3

Source: AIEC

A key strategy of the OEMs operating in South Africa is to expand market share. The OEMs seek

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Currency indices for Rand versus major trading partners (Foreign currency: Rand – annual averages)

Currency 2005 2006 2007 2008 2009 2010

Japan (100 Yen) 5.78 5.82 5.99 8.05 9.02 8.35

Index 100 101 104 139 156 144

Euro 7.91 8.52 9.66 12.05 11.70 9.71

Index 100 108 126 152 148 123

US ($) 6.36 6.77 7.05 8.25 8.44 7.32

Index 100 106 111 130 133 115

Source: South African Reserve Bank

In line with many other developing countries, deviations in the currency of trading partners will con-sequently impact on domestic operations. The rand has appreciated significantly in 2010 compared to the Euro and the US dollar. In addition, as automotive tariffs into South Africa are reduced, imports can be expected to gain a larger share of the domestic market. Nominal tariffs for CBUs and original equipment components will decline gradually up to 2012.

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EXPORTS – METHODOLOGY

The data in the Automotive Export Manual – 2011 – South Africa publication is processed based on the detailed Customs and Excise statistics for products eligible under the MIDP, obtained from the South African Revenue Service (SARS). The Customs and Excise export values reflect free on board (FOB) values in nominal terms. The export values of the latest year (2010) were used to rank the countries in order of priority, from the most to the least important export country destination. The same principle was applied to prioritise the export data regarding regions, vehicles and component categories. Approximately 211 country export destinations are listed by SARS. For purposes of rel-evance one million rand (R1 million) was used in the Automotive Export Manual – 2011 – South Africa publication as a measure to determine the top 131 South African export country destinations. For ease of reference and for comparisons the data with respect to the component categories and for countries, where applicable, were placed in alphabetical order. Percentages were rounded off.

The main purpose of this publication is to discern and highlight export trends, to prioritise export country destinations, to identify opportunities via potential growth country and region destinations as well as to identify growth in products exported to specific country destinations. The publication also serves as a guide to track the export performance of the South African automotive industry under the MIDP over recent years. Due to certain limitations Customs and Excise statistics cannot always dis-tinguish between automotive components eligible in terms of the MIDP and non-MIDP components and certain categories, such as automotive tooling, may contain a small percentage of non-MIDP components.

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EXPORTS TO REGIONS

Globally, major automotive manufacturing regions include the North American Free Trade Area (NAFTA), Western Europe, Japan, Asia-Pacific, Eastern Europe, South America and South Africa. The Triad economies of North America, Europe and Japan comprised 38,7 million or 49,9% of global vehicle production of 77,6 million in 2010. The demand side for vehicles, which is declining in the mature Triad markets, is problematic since supply is exceeding demand. Hence, the rush for cost savings by the OEMs is a priority area. The offensive strategies of a few dominant OEMs to win mar-ket share, in an intensely competitive global environment, impact significantly on the developments of the automotive component suppliers in the supply side. Developing countries and regions, provi-ding lower cost manufacturing and huge growth potential for both the global automotive supply and demand sides, are increasingly important focus areas. A case in point is the BRIC countries which are increasing their global market shares as reflected by the vehicle production gains from 2009 to 2010 of 93,5% in the case of Russia, 33,8% in the case of India, 32,4% in the case of China and 14,6% in the case of Brazil.

Cross-border business involves customs duties as just one of the barriers being encountered. However, a myriad of other compliance and protectionist instruments, such as specific tariffs, anti-dumping measures, and a plethora of non-tariff barriers for products and different types of com-pany behaviour have arisen as significant and often insurmountable barriers to trade, especially for developing country firms. In many countries the automotive sector enjoys iconic status but this is generally only possible behind high tariff and non-tariff barriers. In addition, logistical costs, raw ma-terial prices, currency volatility and global developments, amongst others, place further burdens on delivering products to the market place. Globally, more countries are entering into bilateral and mul-tilateral trade agreements, and, as a result, the challenge for the South African automotive industry is how to accommodate the MIDP in such agreements without affecting the integrity of the programme.

EUROPEAN UNIONEurope is South Africa’s most important economic trading partner, accounting for R327 billion or 28% of the country’s total imports and exports of R1 169 billion in 2010. South Africa’s trade relations with the EU are governed by the Trade, Development and Co-operation Agreement (TDCA). The main objective of the TDCA is to create a free-trade area between South Africa and the European Union (EU) over a 12-year period: it will remove 90% of all trade barriers. The EU and South Africa will, in terms of the agreement, open their markets to each other at a different pace. The EU-SA Free Trade Agreement on trade, development and co-operation became effective on 1 January 2000. The agreement is based on preferential rates of import duties for certain products having been deemed to originate in the partner country. South Africa will grant duty-free status to 86% of its EU imports, while the EU will give duty-free status to 95% of South Africa’s exports.

Initially the EU consisted of just six countries: Belgium, Germany, France, Italy, Luxembourg and the Netherlands. Denmark, Ireland and the United Kingdom joined in 1973, Greece in 1981, Spain and Portugal in 1986 and Austria, Finland and Sweden in 1995. In May 2004, the biggest ever en-largement took place with 10 countries joining: Czech Republic, Cyprus, Estonia, Hungary, Latvia,

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SLithuania, Malta, Poland, Slovenia and Slovakia. On 1 January 2007 the EU welcomed its 26th and 27th members, Bulgaria and Romania. Poland, the Czech Republic and Hungary, in particular, are significant to the automotive sector. The new countries will also be bound by the current free trade agreement.

The implications, from a South African perspective on the automotive industry, were only finalized on 15 December 2006 and meant that between 15 December 2006 and 1 January 2008 the EU would drop all import tariffs on South African-manufactured vehicles and automotive components and South Africa would return the compliment by applying preferential tariffs. Passenger cars into the EU normally attract an import duty of 10% while original equipment components an import duty of 3% and aftermarket automotive parts an import duty of 4,5%. Effectively from 1 January 2000, when the SA-EU Free Trade agreement was signed, the applied tariffs for automotive components into the EU were reduced by 50% below normal EU duty rates, which provided South Africa with a competitive advantage against competing countries. The impact of these preferences is evident in the component and vehicle export data in respect of the EU. The import duty on automotive compo-nents was reduced to duty-free on 15 December 2006 while the 10% import duty on passenger cars was reduced to 3,5% on 15 December 2006, to 1,5% on 1 January 2007 and fell away completely in January 2008. South African commercial vehicle exports to the EU were already duty-free and unaffected by the agreement. In return South Africa is offering a 7% preference to the EU on pas-senger cars and light commercial vehicles and an 8% preference on medium and heavy commercial vehicles and buses. Original equipment components will get no preference but a large number of aftermarket automotive component parts will qualify for lower import duties. In order to qualify for zero tariffs into the EU, South African vehicles and components must contain at least 60% local content. The definition of local content includes South African raw materials, labour, parts, transport, manufacturing costs and profit margins, as well as the value of components and subcomponents originally sourced from Europe.

In 2010 automotive exports (vehicles and components) to the EU amounted to 47,6% or R33,1 billion of South Africa’s total automotive exports of R69,5 billion. Exports to the 12 new member countries forming part of the expanded EU comprised R2,63 billion or 7,9% of the total R33,1 billion export value to the EU, compared to the 8,2% or R2,04 billion in 2009. Total automotive exports to the EU increased by 25,1% or R8,18 billion from 2007 to 2008 but declined substantially by R15,77 billion or 38,8% from 2008 to 2009, largely due to the decline in catalytic converter exports to the region coupled with the impact of the global financial crisis and the economic recession experienced in the Euro zone countries in 2009.

Exports to the European Union (EU) – 2006 to 2010

Component 2006 2007 2008 2009 2010

TOTAL (R million) 27 313,1 32 509,1 40 680,5 24 907,9 33 116,4

Air Conditioners 1,1 9,0 0,2 2,7 4,4

Alarm Systems 43,3 54,2 61,3 31,6 41,0

Automotive Tooling 99,5 117,1 144,4 85,0 56,7

Axles 114,1 165,8 164,2 7,2 34,8

Batteries 53,6 49,6 65,9 46,0 20,8

Body Parts / Panels 53,3 59,8 57,8 44,4 28,2

Brake Parts 63,9 89,0 86,2 51,6 31,9

Car Radios 367,6 570,3 1,0 6,5 11,0

Catalytic Converters 13 186,2 16 825,7 20 565,9 10 015,6 11 886,1

Clutches / Shaft Couplings 53,9 82,8 100,2 119,1 198,0

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Engine Parts 403,1 562,2 1 078,3 746,9 728,1

Filters 95,2 148,5 159,6 186,5 143,0

Gaskets 13,0 31,5 44,9 37,8 31,5

Gauges / Instrument Parts 55,2 65,4 164,8 50,6 38,1

Gear Boxes 47,6 27,0 29,4 31,6 7,0

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SGlass 275,8 251,0 278,6 365,0 284,1

Ignition Start Equipment 123,4 157,2 126,4 66,9 35,5

Jacks 11,5 32,4 37,8 66,2 20,4

Lighting Equipment 18,3 72,6 139,9 101,3 137,7

Radiators 88,8 100,9 85,7 61,2 82,2

Road Wheels / Parts 447,7 609,5 624,3 332,5 323,3

Seats 3,4 0,1 0,1 0,2 0,3

Seat belts 17,7 13,3 3,1 1,7 0,5

Seat Part / Leather 2 234,6 2 566,9 3 125,2 2 321,5 2 871,1

Shock Absorbers - 1,2 175,1 230,6 296,6

Silencers / Exhaust 610,7 1 391,9 1 562,9 1 077,4 1 415,9

Springs 27,7 27,3 24,6 21,4 21,3

Steering Wheels 26,8 91,9 149,2 123,8 131,0

Transmission Shaft 154,5 291,5 454,1 190,1 159,6

Tyres 544,9 529,2 741,2 496,8 381,3

Wiring Harnesses 196,9 179,1 196,8 76,2 40,4

Other Components 1 482,8 1 876,3 1 508,3 1 046,7 1 121,2

Light Vehicles 5 393,8 4 719,6 7 939,4 6 806,8 12 446,2

Medium / Heavy Vehicles 31,9 18,3 419,8 31,2 69,6

Source: AIEC, SARS

TOP EXPORT DESTINATIONS IN THE EU WITH EXPORT VALUE – 2010

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NAFTA (NORTH AMERICAN FREE TRADE AREA)

The North American Free Trade Area consists of the USA, Canada and Mexico. The USA had be-come South Africa’s largest automotive export destination in 2008 and 2009 but was surpassed by Germany in 2010. South Africa is a beneficiary of the USA’s Generalised System of Preference (GSP), which was instituted on 1 January 1976 and grants duty-free status to some goods. Since 2001 trade with the USA has been significantly enhanced by the African Growth and Opportunity Act (AGOA), which was an extension of the GSP and allows duty-free access of additional products into the USA. The African Growth and Opportunity Act (AGOA) represents a non-reciprocal gesture by the USA aimed at liberalizing trade and assisting the growth and development of sub-Saharan African countries by extending duty free and quota free access into the USA market in respect of a broad range of products. The effective commencement date of the duty free access provisions in terms of AGOA was 1 January 2001 until 30 September 2008, which was subsequently extended until 30 September 2015.

The cornerstone of AGOA is the expansion of development and trade with Africa, providing diverse opportunities to grow and integrate the continent into the global economy. South Africa, together with 36 other African countries, had been designated as eligible countries in terms of the Act. AGOA builds on existing USA trade programmes and extends the 4 650 products previously only available under the Generalized System of Preferences programme (GSP) by an additional 1 835 items. Of the order of 98% of traded products currently qualify for duty-free access into the USA market. Vari-ous automotive components and, importantly, motor cars as well as motor vehicles for the transpor-tation of persons and of goods will qualify for a duty free and quota free access into the USA. Duty rates into the USA normally range from 2,5% to 25% in respect of various types of vehicles. The elimination of tariffs enhances South Africa’s potential to compete against the same products not accorded similar tariff benefits in the relevant countries. The degree of the competitive edge derived would be expected to be directly related to the level of tariffs facing all other countries not enjoying the same preference; thus, the higher the tariff the higher the competitive boost.

Exports to NAFTA increased by 2,7% to R16,50 billion in 2010 from the R16,07 billion in 2009. Following the significant 107,5% increase in exports from 2007 to 2008, mainly due to the 272% increase in exports of the new generation BMW 3-series as well as the new generation Mercedes Benz C-Class, exports declined from 2008 to 2009 by 12,2% due to the impact of the global financial crisis and subsequent economic recession in the USA.

Exports to NAFTA – 2006 to 2010

Component 2006 2007 2008 2009 2010

TOTAL (R million) 6 170,4 8 820,6 18 304,3 16 070,0 16 496,0

Air Conditioners 0,6 0,1 - - 1,3

Alarm Systems 10,7 7,0 4,8 2,7 2,6


Axles 232,2 67,7 144,2 19,6 41,6


Brake Parts 6,3 2,5 0,8 0,2 1,0

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SCar Radios 0,1 0,4 0,1 - -

Catalytic Converters 1 350,7 3 313,4 2 182,6 1 432,7 1 810,6


Engines 39,3 40,0 2,3 3,5 2,1

Engine Parts 253,0 136,1 310,0 345,8 370,8

Filters 16,4 30,5 35,3 18,9 37,5

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Gear Boxes 40,8 21,1 20,3 5,7 25,3

Glass 26,2 21,2 12,0 9,3 3,8


Jacks - 15,3 33,0 18,8 28,8


Radiators 180,7 107,4 83,5 51,3 60,3


Seats 1,0 3,7 2,0 0,6 0,2

Seat belts 1,0 0,9 0,4 0,1 0,1

Seat Part / Leather 163,8 128,7 113,1 28,6 15,4

Shock Absorbers - 0,1 0,8 3,7 1,4

Silencers / Exhaust 174,5 158,2 187,7 95,3 178,4

Springs - 2,0 0,1 2,3 0,2

Steering Wheels 20,2 38,6 115,6 31,6 21,9


Tyres 130,0 73,1 143,3 54,9 27,0


Other Components 375,3 473,5 164,2 487,2 248,0

Light Vehicles 2 810,4 3 895,9 14 488,0 13 335,6 13 454,9

Medium / Heavy Vehicles - 17,3 44,7 - 37,1

Source: AIEC, SARS

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TOP EXPORT DESTINATIONS IN NAFTA WITH EXPORT VALUE – 2010

AFRICA

South Africa’s global economic strategy can be viewed through the lens of an economically reinvi-gorated Africa – part of the goal of the New Partnership for Africa’s Development (Nepad). As a re-sult, trade relations with African states are politically important, and of growing economic importance to South Africa. The vision of Nepad is for a self-reliant, innovative and enterprising Africa by way of building export capacity for African companies, attracting new investments from around the world and growing inter-African trade to facilitate faster economic growth on the African continent. South Africa, as the economic powerhouse of the continent, needs to play a major role in this regard. South Africa’s democracy is underpinned by principles such as certainty, transformation, a market-oriented economy and entrenched property rights that create a sound environment for economic growth. The country is currently reaping the rewards of a decade of disciplined monetary and fiscal policies, with an economic growth rate moving to sustainable higher levels.

South Africa represented the biggest domestic market for vehicles in Africa and accounted for 79,9% of the continent’s vehicle production in 2010. Africa remained South Africa’s main export region for commercial vehicles after 1995, while it was also the main destination for exports of South African manufactured passenger cars and light commercial vehicles between 1995 and 1997, during the period when the industry had to adjust structurally under the MIDP. Due to the limited levels of ve-hicle production on the rest of the continent, a diverse range of automotive components is exported by South Africa to the majority of countries in Africa but the bulk of exports consist of aftermarket replacement parts.

Exports, mainly due to light vehicle exports to Algeria and Nigeria as part of Toyota’s Innovative Multipurpose Vehicle programme focusing on Europe and Africa, increased by 114,4% from 2007 to 2008 but declined by 21,1% from 2008 to 2009 due to the impact of the global financial crisis on markets on the continent. From 2009 to 2010 exports declined further by R1,36 billion or 13,5% from the R10,08 billion in 2009 to R8,72 billion in 2010 mainly due to a decline in vehicle exports to Algeria and Nigeria.

Exports to Africa – 2006 to 2010

Component 2006 2007 2008 2009 2010

TOTAL (R million) 5 402,6 6 929,2 12 100,7 10 082,2 8 719,2


Alarm Systems 17,3 31,0 15,9 13,2 22,3


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Batteries 29,1 59,1 92,0 119,4 94,3


Brake Parts 32,5 25,7 28,0 40,3 49,1

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SCar Radios 5,4 13,0 11,4 7,8 8,6

Catalytic Converters 16,7 39,9 30,0 27,8 29,2


Engines 38,6 57,7 78,9 78,6 97,8

Engine Parts 127,9 211,5 205,7 245,5 181,2

Filters 54,7 69,3 81,7 94,8 99,1

Gaskets 27,8 41,1 41,7 35,5 35,0


Gear Boxes 12,5 12,8 17,4 17,0 16,7

Glass 7,1 7,0 10,8 12,9 10,8


Jacks 3,0 7,7 10,3 7,8 7,8


Radiators 3,7 10,7 8,5 13,4 14,0


Seats 1,1 1,9 3,4 2,5 2,9

Seat belts 0,7 0,7 0,7 0,8 1,2


Shock Absorbers 1,4 8,3 9,6 17,4 19,3


Springs 2,3 2,7 3,0 2,2 2,2

Steering Wheels 2,7 15,3 6,6 7,1 7,3


Tyres 367,4 593,1 596,8 615,4 583,4


Other Components 769,7 949,3 1 191,3 1 395,5 1 496,8

Light Vehicles 3 257,0 3 596,5 7 711,1 5 855,9 4 627,5

Medium / Heavy Vehicles 315,0 515,3 1 194,0 871,1 765,2

Source: AIEC, SARS

TOP EXPORT DESTINATIONS IN AFRICA

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SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC)

South Africa’s participation in the Southern African Development Community (SADC), comprising 15 sub-Saharan African countries, allows access to a market of approximately 200 000 million people. SADC operates as a Free Trade Area. The 15 SADC countries include Angola, Botswana, Demo-cratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Sey-chelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe. South Africa joined the SADC in August 1994. The SADC Trade Protocol was signed in 1996 and implemented in 2000, aimed at progressively establishing a SADC free trade agreement by 2008. To date all signatories, except for Zimbabwe, have translated their commitments into domestic enabling legislation. Angola has not yet made an offer or implemented the SADC Trade Protocol while the Democratic Republic of Congo and Seychelles, even though members of SADC, are not party to the SADC Trade Protocol.

The intention is that the agreement encourages economies of scale, creating competitive SADC-wide industries and thereby increasing intra-regional trade and enhancing foreign investment in the region. Given the high level of competition for foreign direct investment among emerging markets, South Africa has placed greater importance on forming strong economic trading blocs to gain access to key markets. The SADC agreement consists of general objectives rather than specific obligations. The key policy objective is to strengthen trade and development linkages between South Africa and other SADC countries. By 2012 about 98% of SADC merchandise trade will be subject to zero tariffs. The phase-down offers are country-specific on the principle of reciprocity, for example, tariff prefer-ences will be extended only to member states that have submitted their instruments of implementa-tion. South Africa has bilateral agreements with Malawi, Mozambique and Zimbabwe, which were concluded in the past. These agreements are not very comprehensive and will remain in place until the SADC tariff preference supersedes those of the bilateral agreements.

In 2010, automotive exports (vehicles and components) to the SADC amounted to nearly R4,91 bil-lion and comprised 7,1% of South Africa’s total automotive exports of R69,5 billion. Several SADC countries have consistently remained as the South African automotive industry’s key export destina-tions since 1995. The SADC remained the main export region for the country’s commercial vehicles over the past decade as well as a major destination for passenger cars and automotive components, especially during the 1990s when license agreements restricted multinational exports to sub-Saha-ran Africa. Since no vehicles are produced in the SADC region, except for South Africa, a wide range of automotive components is exported from South Africa to all these countries but the bulk of exports consist of aftermarket replacement parts.

Exports to South African Development Community (SADC) – 2006 to 2010

Component 2006 2007 2008 2009 2010

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STOTAL (R million) 2 784,6 3 863,0 6 066,5 5 100,3 4 907,1


Alarm Systems 11,6 14,1 9,8 10,1 12,3


Axles 13,0 14,1 19,2 28,2 12,9

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Brake Parts 24,9 25,7 20,1 26,8 24,5

Car Radios 3,9 9,6 9,0 6,0 7,1



Engines 34,7 50,1 72,3 74,1 86,2

Engine Parts 98,5 137,1 151,7 198,2 157,3

Filters 45,4 52,1 64,2 75,6 88,9

Gaskets 22,2 27,7 35,4 27,4 29,4


Gear Boxes 12,1 10,3 16,1 14,2 14,2

Glass 5,7 5,4 8,4 9,7 8,9


Jacks 2,2 5,9 8,5 7,0 6,1


Radiators 3,2 7,5 6,5 11,4 11,7


Seats 1,0 1,3 2,4 2,0 2,5

Seat belts 0,7 0,6 0,6 0,6 1,0


Shock Absorbers 1,4 6,7 9,3 15,1 17,8


Springs 1,8 2,1 2,8 1,7 1,8

Steering Wheels 2,5 5,1 5,8 5,9 5,6


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STyres 237,3 322,9 443,7 440,5 432,5


Other Components 566,0 766,6 915,1 1 121,5 1 206,8

Light Vehicles 1 174,2 1 495,8 2 525,3 1 725,6 1 561,8

Medium / Heavy Vehicles 287,7 378,5 1 123,6 777,6 742,7

Source: AIEC, SARS

TOP EXPORT DESTINATIONS IN SADC WITH EXPORT VALUE – 2010

MERCOSUR (MERCADO COMÚN DEL SUR -

COMMON MARKET OF SOUTH AMERICA)

Mercosur was created by Argentina, Brazil, Paraguay and Uruguay in 2001, with Mexico and Vene-zuela recently being accepted, to join Bolivia and Chile as associate members. The commercial free trade agreement negotiations between Mercosur and South Africa began formally with the signing of a Framework Agreement in December 2000. Until December 2002 the parties opted to negotiate an Agreement on Fixed Tariff Preferences as an intermediate stage towards the free trade agreement. Since June 2003 the negotiations were expanded to include the other countries under the Southern African Customs Union (SACU). A preferential trade agreement (PTA) between SACU and Mercosur was signed in December 2004. The aim of the agreement was to strengthen existing relations, pro-mote the expansion of trade, and establish the conditions for the creation of a free trade agreement between Mercosur and SACU. The previously concluded “Framework Agreement for the Creation of a Free Trade Area between Mercosur and the Republic of South Africa” provides for actions aimed at increasing trade, including the mutual granting of tariff preferences. The understanding also makes provision for, among others, additional protocols on the automotive sector and customs cooperation, as well as further negotiations to broaden and deepen the Agreement, including further exchanges of trade preferences. Negotiations may involve the granting and winning of tariff concessions in respect of automotive products.

Trade with Mercosur is relatively small in the context of South Africa’s overall trade regime and in respect of automotive exports (vehicles and components) comprised only R945,7 million or 1,4% of South Africa’s total automotive exports of R69,5 billion in 2010. The bulk of exports was destined for Brazil and consisted of a limited range of products.

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RTSExports to Mercosur – 2006 to 2010

Component 2006 2007 2008 2009 2010

TOTAL (R million) 275,1 422,1 785,9 746,1 945,7

Air conditioners - - - 0,7 -

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SAlarm Systems - 0,1 - 0,1 0,1


Axles 0,1 0,9 0,4 0,4 -

Body Parts / Panels - 0,1 - 2,8 1,5

Brake Parts 0,5 0,2 1,4 0,6 -

Car Radios - 0,2 - - -


Clutches / Shaft Couplings - - 0,2 1,9 35,3

Engines 89,2 175,8 510,0 362,2 603,8

Engine Parts 70,1 65,8 98,8 120,6 82,8

Filters 1,3 1,3 2,3 2,9 2,2

Gaskets - 0,1 1,3 1,1 2,3


Gear Boxes - 4,3 0,3 - -

Glass 0,7 1,7 1,4 1,1 0,7

Ignition/Starting Equipment - - 0,9 - -

Jacks - 0,3 0,3 0,2 -

Lighting Equipment 0,2 0,1 0,1 - 3,8

Radiators 1,3 1,1 3,0 0,6 -

Road Wheels / Parts 13,8 21,1 0,1 - -

Seat Part / Leather - 0,6 0,4 0,2 0,3

Seats - - - 0,1 -

Shock Absorbers - - 1,5 - -


Steering Wheels - - 6,3 2,3 6,3


Tyres 2,2 2,7 15,0 39,6 90,5

Wiring Harnesses - 0,5 0,4 0,7 0,2

Other Components 14,1 19,8 9,7 37,1 47,5

Light Vehicles 1,4 4,9 3,3 1,7 0,5

Medium / Heavy Vehicles 0,2 1,7 0,6 - 0,8

Source: AIEC, SARS

TOP EXPORT DESTINATIONS IN MERCOSUR WITH EXPORT VALUE – 2010

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EXPORTS TO COUNTRIES

The reach in respect of the number of destinations of exports from South Africa is increasing. The number of export destinations for values in excess of R1 million has increased from 62 in 1995 to 131 in 2010. Twelve countries recorded an export value in excess of R1 billion in 2010, while 54 countries recorded an export value in excess of R100 million. The main destinations for South Af-rican automotive products remain first-world markets; however, diversification into new emerging markets is a continuing trend and underlines the automotive industry’s competitiveness drive and a widening of the country’s traditional trading base. New trade and business links in Africa, Asia, the Middle East, South America and, importantly, the new emerging automotive giants, China and India, are being forged.

For conversion to other currencies, please refer to the currency table on page p22.

Export value and ranking by country 2010 vs 2009

Country 2010 Ranking 2010 R million 2009 Ranking 2009 R million

Germany R19 521,9 1 2 R13 444,8

USA R15 718,2 2 1 R15 000,8

Japan R3 424,0 3 3 R3 099,7

Australia R2 992,6 4 4 R2 687,3

United Kingdom R2 677,5 5 5 R2 231,5

Spain R2 349,1 6 6 R1 965,1

France R1 736,2 7 7 R1 770,9

Poland R1 474,7 8 10 R1 427,7

Belgium R1 394,1 9 9 R1 454,4

Zimbabwe R1 258,3 10 12 R1 172,5

Mozambique R1 184,7 11 13 R1 029,1

Algeria R1 047,1 12 8 R1 719,3

12 COUNTRIES ABOVE R1 BILLION

Zambia R982,2 13 14 R955,0

Brazil R875,6 14 18 R588,8

Nigeria R830,9 15 11 R1 329,8

Korea Rep South R784,2 16 22 R421,7

Netherlands R693,7 17 17 R610,5

Sweden R651,2 18 28 R352,4

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SCzech Republic R632,1 19 23 R417,0

Canada R493,3 20 16 R679,2

Dem Rep of Congo R396,0 21 32 R283,9

Kenya R386,1 22 24 R396,4

India R360,8 23 41 R119,4

Ghana R358,7 24 21 R433,3

Malawi R331,5 25 20 R443,2

Turkey R323,8 26 19 R492,0

Italy R320,4 27 29 R331,7

Mexico R298,7 28 40 R126,8

Taiwan R284,9 29 39 R142,7

Angola R272,0 30 15 R703,4

Hungary R262,0 31 46 R104,3

Finland R244,2 32 36 R151,4

Switzerland R241,4 33 64 R40,8

Tanzania R240,6 34 26 R366,3

Portugal R238,3 35 30 R308,8

China R232,0 36 52 R69,8

Singapore R221,8 37 31 R288,3

Ireland R197,9 38 43 R112,5

Egypt R189,0 39 25 R381,1

Hong Kong, China R187,9 40 34 R171,2

Austria R178,0 41 37 R146,2

Afghanistan R166,7 42 112 R3,7

UAE R163,2 43 27 R356,6

Estonia R150,8 44 82 R18,6

Mauritius R143,4 45 42 R117,1

Greece R135,0 46 59 R49,5

New Zealand R126,1 47 53 R69,7

Uganda R122,4 48 48 R97,7

Malaysia R118,3 49 70 R32,2

Gibraltar R116,4 50 50 R85,8

Gabon R113,0 51 45 R108,7

Venezuela R112,2 52 38 R143,1

Ethiopia R110,3 53 56 R59,4

Norway R103,2 54 51 R81,4

54 COUNTRIES ABOVE R100 MILLION

Romania R90,6 55 65 R37,9

Madagascar R82,4 56 49 R87,3

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RTSPeru R73,1 57 111 R4,0

Morocco R57,2 58 35 R157,1

Seychelles R51,8 59 55 R62,8

Pakistan R50,7 60 69 R33,3

Ivory Coast R50,0 61 61 R44,4

Mali R49,9 62 63 R43,7

Thailand R47,0 63 44 R112,1

Russian Federation R42,8 64 89 R13,2

Luxembourg R41,2 65 - R0,2

Saudi Arabia R37,8 66 54 R63,4

Azerbaijan R36,7 67 - -

Mauritania R34,6 68 66 R37,3

Tunisia R31,2 69 77 R24,7

Djibouti R30,6 70 74 R26,7

Reunion R30,5 71 80 R21,6

Guadeloupe R28,3 72 84 R16,8

Rwanda R28,0 73 60 R48,9

Philippines R27,1 74 92 R11,5

Senegal R26,1 75 62 R43,9

Qatar R25,3 76 71 R31,5

Rep of Congo R25,3 77 78 R23,7

Cameroon R22,8 78 87 R14,6

Guinea R22,1 79 73 R28,4

Liberia R21,8 80 68 R34,4

Argentina R21,7 81 57 R54,8

Sierra Leone R21,5 82 96 R8,4

Martinique R20,9 83 86 R15,5

Sudan R20,2 84 58 R53,2

Eritrea R20,1 85 99 R8,0

Iraq R18,2 86 33 R245,2

Denmark R14,3 87 105 R5,6

Burkina Faso R14,0 88 67 R35,1

Chile R13,0 89 47 R100,3

French Guiana R12,8 90 83 R17,5

Cyprus R10,9 91 - R0,9

Somalia R9,7 92 91 R11,5

Oman R9,4 93 94 R10,5

Kuwait R9,4 94 76 R25,3

Burundi R9,2 95 95 R8,4

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SBenin R8,6 96 85 R15,7

Central African Rep R8,5 97 106 R5,6

Israel R8,0 98 90 R12,2

Jordan R7,2 99 116 R2,8

Mongolia R7,0 100 - -

Lebanon R6,9 101 97 R8,1

Trinidad & Tobago R6,3 102 100 R7,9

Libya R5,4 103 121 R1,5

Iran R4,6 104 101 R6,4

Colombia R4,6 105 79 R22,5

Slovenia R4,4 106 75 R25,5

Haiti R4,2 107 115 R3,0

Syrian Arab Rep R3,6 108 109 R4,2

Iceland R3,5 109 - R0,6

Georgia R3,4 110 120 R1,7

Togo R3,4 111 - R0,2

Equatorial Guinea R3,3 112 123 R1,2

Indonesia R3,0 113 107 R4,9

Mayotte R2,8 114 124 R1,1

Chad R2,7 115 81 R19,6

Bulgaria R2,5 116 - R0,2

Jamaica R2,4 117 118 R2,0

Comoros R2,3 118 117 R2,6

Guatemala R2,2 119 - -

Barbados R2,1 120 122 R1,5

Niger R2,1 121 103 R6,3

Ukraine R2,0 122 - R0,2

Kazakhstan R2,0 123 102 R6,4

Guyana R1,8 124 - R0,3

Ecuador R1,6 125 114 R3,1

Cambodia R1,5 126 - R0,2

Papa New Guinea R1,4 127 - R0,4

Slovak Republic R1,4 128 104 R5,7

Sri Lanka R1,3 129 125 R1,0

Gambia R1,2 130 98 R8,0

Yemen R1,1 131 72 R30,5

131 COUNTRIES ABOVE R1 MILLION

Source: AIEC, SARS

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RTSFrom 2009 to 2010 the export values more than doubled to 33 countries, which include: India, Mex-ico, Hungary, Switzerland, China, Afghanistan, Estonia, Greece, Malaysia, Romania, Peru, Russia, Luxembourg, Azerbaijan, Philippines, Sierra Leone, Eritrea, Denmark, Cyprus, Jordan, Mongolia, Libya, Iceland, Georgia, Togo, Equatorial Guinea, Mayotte, Bulgaria, Guatemala, Ukraine, Guyana, Cambodia and Papa New Guinea.

TRADE AND INVESTMENT OPPORTUNITIES

South Africa’s international stature is increasingly recognised and as a result trade and investment opportunities for the country’s economy in general and its automotive sector in particular are emer-ging.

BRIC countries

South Africa has formally joined the economic coalition that includes Brazil, Russia, India and China (BRIC) in 2011 to become a full member of a new emerging markets bloc dubbed BRICS – Brazil, Russia, India, China and South Africa. As forecasts go, China is now expected to overtake the USA to become the world’s biggest economy by 2030, after surpassing second-biggest Japan in 2010. Currently India is the world’s fourth-largest economy, ahead of Germany, while Russia is in sixth place, followed by Brazil. South Africa is ranked 25th, behind Thailand, according to the International Monetary Fund 2010 rankings. South Africa joining is an affirmation of its role in the world economy.

China, with 18,6 million units was the top vehicle producing country in 2010 with Brazil 6th, India 7th and Russia 14th. China, India and Russia were amongst the 33 countries to which South African automotive exports more than doubled from 2009 to 2010. The automotive trade balance, however, remains in favour of these countries, except for Russia, and in 2010 the automotive import to export value ratio was 22 to 1 in favour of China, 8,5 to 1 in favour of India and 3,6 to 1 in favour of Brazil. South Africa’s increasing exposure as being part of the group as well as the current preferential trade negotiations between South Africa and India could enhance trade and investment opportunities for the domestic automotive industry.

Automotive trade balance and ratio 2010 – imports vs exports

Country 2010 importsR million

2010 exportsR million

China R5 151,7 R232,0

Ratio 22,2 1

India R3 069,6 R360,8

Ratio 8,5 1

Brazil R3 145,7 R875,6

Ratio 3,6 1

Russia R2,5 R42,8

Ratio 0,06 1

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SSource: AIEC, SARS

SADC – EAC – COMESA Tripartite Alliance

The membership of the three regional economic communities SADC, East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) has initiated a process to es-tablish a 26-country free trade area. The EAC currently operates as a customs union. In practise COMESA is still a free trade area, but it is currently phasing in its common external tariff with a view to achieve a customs union by 2012. SADC operates as a free trade area. It, however, includes the Southern African Customs Union (SACU) which is a customs union, though. The three Regional Economic Communities comprise 26 countries with a combined population of 527 million people, a combined gross domestic product of US$624 billion, a GDP per capita averaging US$1 184 and ac-count for half of the African Union in terms of membership, just over 58% in terms of a contribution to GDP and 57% of the total population of the African Union.

South Africa is of the view that the best approach to regional integration is to build on existing re-gional integration communities and build deeper and wider FTAs in a practical manner. This is the basis for prioritising the consolidation of the FTA in SADC and the need to explore what it means to achieve broader African FTAs, the immediate priority being the Tripartite FTA. As far as potential opportunities for the South African automotive industry are concerned, South Africa produced 79,9% of Africa’s vehicle production in 2010. Vehicle and automotive component exports to the three in-dividual Regional Economic Communities in 2010 amounted to R4,91 billion in respect of SADC, R786 million in respect of the EAC and R4,17 billion in respect of COMESA. Harmonisation of trade regimes, increased market liberalisation and various other areas of cooperation could present the South African automotive industry with increased export opportunities.

The current membership of the three Regional Economic Communities (RECs) is summarised in the following table. The countries in italic font are the ones to which South Africa does not yet have preferential access.

Membership of the three Regional Economic Communities

COUNTRY SADC EAC COMESAAngola xBotswana xDRC x xLesotho xMadagascar x xMalawi x xMauritius x xMozambique xNamibia xSeychelles x xSouth Africa xSwaziland x xTanzania x xZambia x xZimbabwe x xBurundi x xKenya x xRwanda x x

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RTSUganda x xComoros xDjibouti xEgypt xEritrea xEthiopia xLibya xSudan x

Potential SACU – India preferential trade agreement (PTA)

Already in 2002 the South African and Indian governments agreed to initiate negotiations to conclude a preferential trade agreement (PTA) to strengthen bilateral trade and investment. This agreement is proposed to cut tariffs on a limited number of products between the two regions. The long-discussed topic has finally resulted in the exchange of offensive lists between the SACU and Indian govern-ments in 2011. Automotive products also feature in these offensive lists and could enhance trade and investment opportunities for the domestic automotive sector. The following table reveals the South African automotive industry’s trade balance with India in 2010.

India (Total trade R3 404,2 million) – 2010

Main products ExportsR360,8 million

Main products ImportsR3 043,4 million

Engines 145,7 Light vehicles 2 251,5Catalytic converters 124,5 Original equipment components 165,6

Engine parts 22,8 MCV/HCV vehicles 132,2Body parts/panels 12,3 Engine parts 56,4

Automotive tooling 5,4 Automotive tooling 44,5Other 50,1 Other 393,2

Source: AIEC, SARS

SACU – EFTA free trade agreement

In 2005 the Southern African Customs Union (SACU) and the European Free Trade Association (EFTA) concluded an agreement to establish a free trade agreement (FTA) between the two regions. Norway and Switzerland were among the founding member states of EFTA in 1960. Iceland joined EFTA in 1970, followed by Liechtenstein in 1991. The free trade agreement provides for reciprocal preferential market access between EFTA and SACU states. The SACU–EFTA FTA which entered into force on 1 May 2008 provides for South African economic operators to take advantage of trade opportunities offered by the agreement and also consolidating trade relations with Western Europe.

EFTA countries are world leaders in several sectors vital to the global economy. Liechtenstein and Switzerland are internationally renowned financial centres and hosts to major companies and multi-nationals. The FTA brings about a number of benefits to economic operators which include duty free and quota free market access for SACU industrial products into EFTA markets.

The following table reveals the South African automotive industry’s trade balance with EFTA coun-tries.

Automotive trade balance 2010 – EFTA countries

EFTA countries 2010 ImportsR million

2010 ExportsR million

Switzerland R202,8 R241,4

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Norway R19,5 R103,2Iceland R1,9 R3,5Liechtenstein R3,6 -

Source: AIEC, SARS

South African automotive industry exports more than doubled to Switzerland and Iceland from 2009 to 2010.

EXPORTS OF VEHICLES

The South African automotive industry exported left and right hand drive vehicles to 77 destinations in 2010. The top markets were the USA with 58 370 units followed by the UK with 39 865 units, Japan with 21 347 units, Australia with 18 112 units and France with 13 389 units.

In 2010 the 239 465 CBU exports from South Africa comprised 75,8% or 181 654 passenger cars, 23,8% or 56 950 light commercial vehicles and 861 or 0,4% medium and heavy commercial vehicles and buses. Passenger car exports as a percentage of passenger car production totaled 61,5% in 2010 compared to the 3,7% in 1995.

Volkswagen SA, with its Polo-series, was the leading exporter in 2010 overtaking Toyota, the export leader since 2006 with its Innovative/International Multipurpose Vehicle programme and Corolla se-dan. Opportunities presented by the African Growth and Opportunity Act (AGOA), which was imple-mented on 1 January 2001 by the USA towards 37 African countries, allowed for the duty and quota free access of a variety of products, including vehicles, to the USA market. This trade arrangement provided impetus for the automotive sector’s export drive to the USA and hence, the country beco-ming the top destination for South African manufactured light vehicles. The Mercedes Benz C-class and the BMW 3-series are currently exported to the USA.

The important objective of the MIDP in terms of model rationalization is not just to reduce the num-ber of models but also to increase the model volumes of those models assembled in the domestic market as well as the local content, in line with average volume increases. The average volumes of passenger cars per model produced by the OEMs have increased from 11 500 units in 1995 to 29 900 units in 2010, however the local content has remained stable.

Light vehicles (passenger cars and light commercial vehicles) exports – 2006 to 2010

Country 2006 2007 2008 2009 2010TOTAL (R billion) 23,9 27,8 48,3 32,2 37,8

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RANKING OF EXPORTERSNumber 1 to Number 5

ToyotaBMWVW

MBSAFord

ToyotaBMWVW

MBSAFord

ToyotaVW

BMWMBSA

GM

ToyotaBMWMBSA

VWFord

VWToyotaMBSABMWFord

TOTAL (units) 179 320 170 587 282 984 174 116 238 604USA 11% 13% 30% 41% 35%Germany 1% 1% 2% 13% 22%Japan 29% 26% 14% 8% 8%Australia 20% 20% 13% 7% 7%Algeria 3% 3% 2% 4% 3%France 2% 2% 2% 2% 2%Nigeria 1% 2% 4% 4% 2%UK 12% 3% 2% 1% 2%Korea Rep South - - - 1% 1%Zimbabwe 1% 2% 1% 1% 1%Other 20% 28% 30% 18% 17%EU 20,2% 15,1% 16,5% 21,1% 32,8%NAFTA 10,9% 13,9% 30,0% 41,4% 35,5%SADC 4,7% 5,4% 5,2% 5,4% 4,1%

Source: AIEC, NAAMSA/RGT, SARSExports of medium and heavy commercial vehicles and buses, in relation to passenger cars and light commercial vehicles, have been relatively insignificant in terms of volumes over the past decade. The main export destinations have consistently been South Africa’s neighbouring countries in the SADC region.

Medium, heavy commercial vehicles and buses exports – 2006 to 2010

Country 2006 2007 2008 2009 2010

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STOTAL (R billion) 0,7 0,7 1,1 0,9 0,9

TOTAL (units) 539 650 1 227 831 861

RANKING OF EXPORTERSNumber 1 to Number 5

ScaniaNissan Diesel

MANGM

Ford

ScaniaNissan Diesel

GMNavistar

MAN

ScaniaNissan Diesel

VolvoGM

Iveco

Nissan DieselIveco

ScaniaMAN

Renault Trucks

UD Trucks*MAN

ScaniaIvecoGMSA

Zimbabwe 8% 23% 32% 26% 35%

Mozambique 8% 9% 18% 18% 24%

Zambia 11% 16% 13% 14% 8%

Germany 1% 1% 1% - 6%

Malawi 4% 6% 9% 13% 6%

Tanzania 7% 5% 7% 8% 5%

Canada - - 2% - 4%

Dem Rep of Congo 1% 6% 2% 1% 4%

Australia 23% 4% 1% 1% 2%

UK 3% 1% - - 1%

Other 34% 29% 15% 19% 5%

EU 4,7% 2,7% 1,3% 3,4% 7,7%

NAFTA - 2,6% 2,2% - 4,1%

SADC 42,0% 66,6% 89,3% 84,9% 82,7%

Source: AIEC, NAAMSA/RGT, SARS*Nissan Diesel now UD Trucks

AUTOMOTIVE COMPONENTS – EXPORTS

Automotive component exports increased by R2,94 billion or 10,6% to R30,8 billion in 2010, from the R27,9 billion in 2009. However, recognising the fact that the Rand strengthened by an average of 15%, the growth in foreign currency terms was 30%, a remarkable recovery from the depressed 2009 level, and only 17% below the 2008 peak in real terms. The focus of exporters tends to be on high value domestically beneficiated automotive components that consume as little transport and space as possible. Catalytic converters remained the main component exported under the MIDP. The popularity of catalytic converters, the main purpose of which is to reduce harmful emissions from vehicles, is continuing to grow, owing to increasingly stringent emission legislation in Europe and the USA. South Africa supplies approximately 15% of the global market for these converters.

South African component suppliers have been able to use their production flexibility as a decisive competitive advantage in penetrating global markets. Automotive component manufacturers seek contact with outside partners for purposes of market access, technology, process know-how, pro-duction rationalisation and other joint venture benefits. The diversification of automotive exports is important because it reinforces a longer-term export future for the industry.

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RTSContinuous efforts to grow the South African automotive industry’s export business are imperative. A successful platform to showcase and promote the South African automotive industry’s world-class capabilities is participation by means of National Pavilions at major world events as well as inward and outward trade missions. During 2011/12, financial assistance under Trade and Investment South Africa’s Export Marketing and Investment Assistance Scheme (EMIA), will be provided to exhibitors to attend National Pavilions at the Automechanika Middle East event in Dubai, UAE from 7 to 9 June, 2011, as well as the Johannesburg International Motor Show at Nasrec, Johannesburg from 6 to 16 October, 2011.

Automotive component export ranking by component category – 2006 to 2010

COUNTRY 2006 2007 2008 2009 2010% OF 2010

TOTAL2010

Ranking

TOTAL (R million) 30 052 39 106 44 055 27 853 30 802 100%

Catalytic converters 15 810 21 683 24 267 12 280 14 761 47,9% 1

Stitched leather seat parts 2 549 2 760 3 084 2 357 2 898 9,4% 2

Silencers/exhaust 880 1 705 1 913 1 283 1 696 5,5% 3

Engine parts 984 1 092 1 853 1 554 1 505 4,9% 4

Tyres 1 220 1 196 1 676 1 355 1 133 3,7% 5

Engines 1 216 1 080 1 045 605 965 3,1% 6

Automotive tooling 272 520 518 464 447 1,5% 7

Transmission shafts/cranks 351 556 782 503 415 1,3% 8

Road wheels and parts 681 772 694 388 383 1,2% 9

Filters 218 275 316 341 337 1,1% 10

Shock absorbers 1 12 172 261 329 1,1% 11

Automotive glass 321 295 314 403 305 1,0% 12

Radiators 365 368 350 384 286 0,9% 13

Clutches/shaft couplings 81 152 166 194 270 0,9% 14

Gauges/instruments/parts 184 248 328 291 241 0,8% 15

Lighting/signalling/wiping 63 164 210 165 229 0,7% 16

Steering wheel/column/box 69 150 287 169 170 0,6% 17

Batteries 83 115 169 172 116 0,4% 18

Axles 375 273 279 186 111 0,4% 19

Brake parts 120 138 124 105 93 0,3% 20

Ignition/starting equipment 174 204 191 126 83 0,3% 21

Jacks 18 60 88 110 83 0,3% 22

Body parts/panels 115 127 122 75 75 0,2% 23

Gaskets 45 70 103 84 75 0,2% 24

Alarm systems 81 97 92 53 73 0,2% 25

Gear boxes 113 86 84 80 67 0,2% 26

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SWiring harnesses 208 198 205 93 51 0,2% 27

Air conditioners 11 21 29 19 35 0,1% 28

Seat belts 60 62 48 41 33 0,1% 29

Springs 38 44 44 35 30 0,1% 30

Car radios 377 589 14 43 20 - 31

Seats 7 8 8 6 5 - 32

Other parts of parts 2 962 3 986 4 480 3 628 3 482 11,3%

Source: AIEC, SARS

The range, in respect of the diversity of automotive products, is increasing. Many of the domestic automotive component manufacturers have links with European-based companies, which is largely because the German OEMs put pressure on their European suppliers to form links with South Afri-can companies when they instituted their export programmes. The EU has extensively displaced its own production to lower-cost developing countries such as South Africa.

South African manufactured automotive components are exported worldwide to 131 countries. The main destinations remain first world markets although emerging markets are starting to feature as export destinations indicating progress in the South African component manufacturers’ ability to compete globally.

Top 10 automotive component export destinations – 2006 to 2010

Country 2006 2007 2008 2009 2010

1. Germany 29,3% 28,5% 33,1% 33,2% 35,8%

2. USA 9,7% 8,0% 7,7% 6,0% 8,1%

3. Spain 11,5% 10,4% 9,8% 6,6% 6,7%

4. UK 9,3% 7,8% 8,4% 7,1% 6,3%

5. Poland 2,9% 2,7% 3,2% 3,5% 4,0%

6. Belgium 4,4% 5,0% 5,2% 4,6% 3,8%

7. Brazil 0,8% 1,0% 1,6% 2,1% 2,8%

8. France 7,0% 7,8% 5,8% 4,0% 2,8%

9. Netherlands 1,8% 2,4% 2,3% 2,1% 2,2%

10. Zambia 1,1% 1,3% 1,3% 2,2% 2,1%

Other 22,2% 25,1% 21,6% 28,6% 25,4%

Source: AIEC, SARS

The following tables show the major destinations for the automotive component category exports from South Africa.

Catalytic converters (1)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 15 810,3 21 683,4 24 267,4 12 279,6 14 760,7

Germany 22% 21% 32% 36% 36%

Spain 17% 15% 15% 13% 12%

USA 8% 9% 9% 8% 10%

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RTSUK 11% 10% 10% 8% 8%

Poland 6% 5% 5% 4% 7%

France 12% 12% 9% 7% 5%

Czech Republic 2% 2% 2% 2% 4%

Netherlands 1% 2% 2% 2% 3%

Belgium 5% 5% 5% 6% 3%

Japan 3% 2% 2% 4% 2%

Sweden 3% 2% 2% 2% 2%

Turkey 3% 3% 2% 2% 2%

Mexico - - - 1% 1%

Canada 1% 6% - 3% 1%

Stitched leather seat parts (2)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 2 549,5 2 760,2 3 084,0 2 356,8 2 897,5

Germany 76% 83% 82% 93% 92%

Spain 3% 5% 6% 3% 4%

UK 5% 3% 4% 1% 2%

Silencers/Exhausts (3)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 880,3 1 705,0 1 913,4 1 282,8 1 696,4

Belgium 18% 27% 35% 14% 29%

Germany 30% 33% 18% 13% 21%

Poland - - 12% 36% 13%

USA 17% 9% 9% 5% 8%

Italy 3% 2% 9% 15% 8%

Hungary - - - - 7%

Japan 2% 3% 3% 3% 3%

Spain 6% 2% 2% 1% 2%

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SMexico - 1% 1% 2% 2%

Sweden 5% 3% 2% 2% 2%

Turkey 2% 1% 1% 1% 1%

Engine parts (4)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 983,7 1 091,5 1 852,7 1 553,6 1 505,0

USA 26% 12% 16% 22% 25%

UK 17% 17% 26% 20% 23%

Germany 21% 30% 26% 26% 19%

Brazil 6% 6% 5% 8% 5%

Korea Rep South 7% 6% 5% 1% 5%

Australia - 1% - - 4%

Mozambique 1% 1% 1% 1% 3%

Estonia - - - - 2%

Zambia 3% 4% 2% 3% 2%

Zimbabwe 2% 3% 2% 2% 2%

India 2% 2% - 1% 2%

Dem Rep of Congo - 1% 1% 1% 1%

Angola 2% 2% 2% 4% 1%

Tyres (5)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 1 219,7 1 195,7 1 676,1 1 355,4 1 132,6

Germany 10% 8% 9% 11% 18%

Netherlands 19% 17% 16% 15% 12%

Zimbabwe 5% 8% 6% 7% 10%

Zambia 2% 4% 5% 7% 9%


Brazil - - 1% 3% 8%

Kenya 4% 5% 4% 6% 6%

Angola 3% 4% 5% 4% 3%

Seychelles - - - 3% 3%

Malawi 2% 2% 3% 2% 2%

Nigeria 2% - - 2% 2%

USA 11% 6% 9% 4% 2%

UK 9% 10% 9% 7% 2%

Saudi Arabia 2% 1% 2% 2% 2%

Mauritius 1% 1% 1% 1% 1%

Ghana 1% 1% 1% 1% 1%

55

EXPO

RTSEngines (6)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 1 216,3 1 080,0 1 045,4 604,7 964,9

Brazil 7% 16% 46% 53% 63%

India - - - - 15%

Venezuela 6% 6% 7% 17% 10%

Zambia 1% 1% 3% 6% 5%

UK - - 1% 4% 2%


Zimbabwe - 2% 2% 2% 1%

Automotive tooling (7)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 272,2 519,6 518,0 463,5 446,9

Peru - - - - 15%

China 2% 5% 5% 1% 14%

Turkey 3% - 2% - 8%

UAE 1% 1% 4% 7% 7%

Germany 15% 5% 3% 8% 5%

USA 7% 10% 3% 5% 5%

Australia 9% 11% 4% 2% 4%

Canada 3% - 1% 2% 4%

Romania - - - 1% 3%

Nigeria 2% 1% 2% 1% 3%

Singapore 1% 1% 5% 2% 3%

Zambia 5% 1% 2% 4% 2%


UK 11% 4% 4% 3% 2%

Zimbabwe 2% 1% 1% 3% 2%

Mongolia - - - - 2%

New Zealand - - - - 1%

Angola 2% 26% 1% 2% 1%

India 2% 1% 3% 5% 1%

Korea Rep South - - - - 1%

Kenya 2% 1% 1% 1% 1%

Transmission shafts and cranks (8)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 351,1 556,3 781,7 503,2 415,1

Germany 35% 42% 40% 30% 31%

Zambia 4% 5% 6% 7% 9%

Brazil 12% 11% 7% 6% 8%

Zimbabwe 5% 5% 3% 7% 6%

56

EXP

ORT

SBelgium 5% 6% 5% 7% 5%

Dem Rep of Congo - - 2% 2% 5%

Ghana 1% - 2% 3% 4%


India 1% 1% - 2% 3%

Mali 1% 1% 1% 1% 3%

Australia 2% 1% 1% 2% 2%

Guinea - 1% - 1% 2%

Tanzania 1% 1% 1% 2% 1%

USA 5% 2% 2% 3% 1%

UK 7% 10% 8% 3% 1%

China - - 1% 1% 1%

Road wheels/parts (9)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 681,3 771,9 693,9 387,9 382,7

Germany 40% 49% 66% 72% 71%

Spain - 2% 2% 9% 11%

Thailand - - - - 4%

Algeria - - 1% 2% 2%

Zambia - 2% - 1% 1%

Iraq - 1% 3% 4% 1%

Zimbabwe - 1% 1% 1% 1%

Mozambique - - - 1% 1%

Filters (10)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 217,8 275,5 315,8 341,3 337,5

Germany 29% 40% 31% 40% 31%

Zimbabwe 6% 4% 4% 6% 11%

China - - - - 10%

Belgium 1% 3% 9% 9% 7%

USA 8% 11% 11% 6% 6%


Zambia 5% 5% 5% 5% 5%

Mexico - - - - 5%

Hong Kong - - - - 2%

Australia 11% 8% 7% 3% 2%

Angola 2% 2% 2% 3% 2%

Malawi 1% 1% 1% 1% 1%

Netherlands 6% 7% 8% 2% 1%

57

EXPO

RTS

Shock absorbers (11)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 1,4 12,4 172,3 261,0 329,0

Germany - 1% 93% 88% 90%

China - - - 1% 3%

Zimbabwe 60% 17% 2% 2% 2%

Zambia 32% 19% 1% 3% 2%

Glass (12)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 320,9 295,2 314,5 403,4 305,4

UK 32% 30% 27% 26% 22%

Germany 15% 14% 11% 15% 21%

Belgium 13% 15% 18% 18% 20%

France 11% 11% 13% 15% 12%

Italy 7% 6% 7% 7% 7%

Spain 6% 7% 6% 6% 7%

Poland 1% 1% 1% 1% 3%

USA 8% 7% 4% 2% 1%

Radiators (13)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 365,0 368,3 350,1 383,8 285,6

Australia 22% 36% 44% 22% 29%

Germany 15% 20% 21% 14% 26%

USA 49% 29% 23% 13% 21%

Algeria - - - 27% 12%

Singapore - 1% 1% 2% 2%

Belgium 1% 3% 1% 1% 1%

Zambia - - 1% - 1%

Dem Rep of Congo - - - - 1%

Clutches and shaft couplings (14)

58

EXP

ORT

SCOUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 81,3 152,2 166,0 193,6 270,4

Germany 38% 39% 54% 57% 69%

UAE - 16% 17% 20% 12%

Australia 5% 4% 4% 3% 3%

UK 14% 5% 8% 2% 2%

Mexico 1% 3% 3% 2% 2%

USA 8% 7% 5% 3% 2%

Belgium - 1% 2% 1% 2%

Zimbabwe 5% 2% 2% 2% 2%

Zambia 3% 1% 2% 1% 1%

Gauges, instruments and parts (15)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 183,8 247,7 327,8 290,6 240,8

UK 12% 12% 15% 14% 13%

Zambia 9% 12% 8% 6% 8%

USA 12% 8% 5% 6% 7%

UAE - 1% 6% 6% 7%


Australia 5% 9% 5% 7% 7%


Zimbabwe 3% 3% 3% 4% 4%

Angola 2% 2% 4% 2% 3%

Egypt - - - 1% 3%

Lighting/signalling/wiping equipment (16)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 63,1 164,2 210,3 164,5 229,0

Germany 9% 28% 32% 43% 47%

USA 34% 33% 19% 12% 16%

Russia - 3% 2% 2% 8%

UK 17% 7% 5% 8% 5%

Sweden - 7% 8% 8% 3%

Zimbabwe 3% 2% 3% 2% 3%

Belgium 3% 2% 3% 2% 3%

Australia 6% 3% 2% 2% 3%

Zambia 1% 1% 3% 2% 1%

Mozambique 3% 1% - 1% 1%

Steering wheels/columns/boxes (17)

59

EXPO

RTSCOUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 69,0 149,7 287,4 169,3 170,2

Germany 38% 61% 50% 72% 74%

USA 29% 15% 12% 18% 9%

Brazil - 2% 2% 1% 3%

Mexico - - - - 2%

Algeria 1% 1% 1% 2% 2%

Canada - 11% 29% - 2%

Belgium 1% 3% 1% 1% 2%

Zimbabwe 1% 1% 1% 1% 1%

Batteries (18)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 83,2 115,2 169,1 171,8 116,4

Mozambique 18% 20% 25% 32% 44%

Zambia 9% 11% 13% 19% 22%

UK 57% 36% 31% 22% 12%

Zimbabwe 1% 5% 7% 10% 8%

France 3% 3% 6% 2% 5%

Dem Rep of Congo - 3% - 1% 2%

Malawi - 2% 4% 3% 2%

Pakistan - - - - 1%

Axles (19)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 374,7 273,4 278,6 186,0 111,5

USA 62% 25% 30% 9% 37%

Germany 30% 61% 37% 3% 31%

Algeria - 2% 5% 46% 16%

Zambia 1% 2% 1% 11% 5%

Zimbabwe 1% 2% 3% 2% 2%

Dem Rep of Congo - - - 1% 2%

Tanzania - - - 1% 2%

Australia 1% 1% 1% 1% 2%

Brake parts (20)

COUNTRY 2006 2007 2008 2009 2010

60

EXP

ORT

STOTAL (R million) 120,2 137,7 124,4 104,6 92,7

Belgium 39% 31% 50% 35% 26%

Kenya 3% 2% 3% 2% 22%

Zimbabwe 6% 5% 4% 7% 9%

Zambia 5% 4% 3% 4% 5%

Taiwan 2% 2% 1% 3% 4%

France - 14% 14% 11% 3%

Tanzania 1% 1% 2% 3% 3%

Germany 6% 1% - - 3%


Philippines 2% 2% 2% 2% 3%

Ignition/starting equipment (21)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 174,3 204,2 191,4 126,3 83,2

Germany 68% 73% 54% 48% 41%

Zimbabwe 3% 3% 5% 7% 13%

Zambia 4% 3% 9% 8% 8%



USA 1% 1% 2% 1% 4%

Tanzania 1% 1% 1% 4% 4%

Australia 7% 1% 3% 1% 3%

Thailand - - - 1% 2%

Angola 2% 2% 3% 4% 2%

Jacks (22)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 18,1 60,1 88,3 109,6 82,6

USA - 25% 38% 17% 35%

China - - - 5% 20%

Germany 62% 32% 24% 11% 10%

Korea Rep South - - 1% 6% 7%

Poland - - - 1% 5%

Spain - - - - 4%

UK 1% 2% - 1% 3%

Zimbabwe 2% 1% 1% 2% 3%

Zambia 4% 1% 2% 1% 2%

Australia 15% 6% 3% 3% 1%

Body parts and panels (23)

61

EXPO

RTSCOUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 114,8 127,4 121,6 74,5 75,2

Germany 42% 43% 46% 48% 32%

Mozambique 1% 1% 2% 6% 19%

India - - - - 16%

Zimbabwe 3% 1% 1% 3% 3%

Zambia 6% 35% 13% 5% 3%

Australia 2% - - 1% 3%

Sierra Leone - - - - 3%

Belgium 1% 1% - 2% 3%

Algeria - - - 5% 2%

Brazil - - - 4% 2%

Gaskets (24)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 45,4 69,7 103,3 83,5 75,0

Belgium 8% 14% 12% 17% 16%

Italy 1% 18% 18% 18% 15%

Zambia 12% 10% 6% 7% 14%

UK 9% 4% 6% 7% 7%

Zimbabwe 13% 9% 4% 6% 7%



Angola 7% 11% 10% 9% 4%

Brazil - - 1% 1% 3%

Tanzania 5% 1% 2% 2% 2%

Alarm systems (25)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 80,5 96,9 92,2 52,8 73,2

Netherlands - 36% 58% 48% 45%

Egypt - - - - 5%

UK 49% 14% 5% 5% 5%

Ghana 1% 2% 1% - 5%

Zimbabwe 2% 2% 1% 6% 4%

Malaysia 5% 3% 3% 4% 4%

Zambia 4% 2% 1% 2% 4%

USA 13% 7% 4% 5% 3%

Angola 1% 1% - 1% 3%


Gear boxes (26)

62

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ORT

SCOUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 113,3 85,6 83,8 79,7 66,6

USA 36% 23% 23% 7% 37%

Algeria 1% 2% 5% 12% 11%

Zimbabwe 2% 4% 3% 5% 9%

UAE - 8% 9% 10% 7%

Germany 31% 30% 17% 15% 6%

Zambia 4% 5% 4% 4% 5%


Kuwait - - - 2% 3%

Hungary - - - - 3%

Iraq 4% 4% 11% 16% 3%

Wiring harnesses (27)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 207,9 197,7 205,0 92,6 51,3

Germany 94% 89% 89% 79% 67%

Algeria - 1% 1% 5% 8%

USA 1% - - 1% 3%

Poland - - - 1% 3%

UK - - 1% 1% 3%

Zambia - 1% 1% 3% 2%

Canada - - - 1% 2%

Finland - - - - 2%

Italy - - - - 1%

Air conditioners (28)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 11,5 21,1 29,2 19,0 34,5

Algeria - - 1% 4% 25%

Australia 5% - - 19% 20%

Nigeria 10% 1% 1% 2% 14%

Ghana 1% 3% 1% 1% 6%

Iraq 5% 11% 12% 1% 5%

USA - - - - 5%

UK 7% 43% 4% 12% 4%

Angola 13% 6% 59% 7% 3%

UAE - - 4% - 3%

Mauritius 3% 1% 5% 2% 2%

63

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PORTS

64

IMPO

RTS

Seat belts (29)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 60,3 62,0 47,7 40,8 32,9

Australia 56% 69% 84% 81% 76%

Taiwan 3% 4% 3% 6% 12%

Philippines 2% 1% 3% 4% 7%

Zambia - - - - 1%

Springs (30)

65

IM

PORTS

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 37,7 43,9 43,5 34,6 30,0

Germany 48% 37% 39% 37% 38%

Netherlands 10% 16% 5% 11% 12%

UK 11% 5% 6% 5% 12%

Thailand 9% 21% 20% 7% 9%

Australia 6% 4% 6% 5% 6%

Belgium - 1% 3% 4% 6%

Japan - - - 2% 3%

Sweden 4% 3% 2% 3% 2%

Zambia 1% 1% 1% 1% 1%

DRC - - 1% - 1%

Car radios (31)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 376,7 589,4 14,3 43,3 20,0

Germany 82% 82% 4% 13% 53%

Mozambique - - 29% 15% 15%

Malawi - - 5% 3% 9%

Zambia - - 18% 8% 5%

Egypt - - 5% 1% 4%

Zimbabwe - - 3% 4% 3%

Angola - - 6% 2% 2%

Nigeria - - 1% 1% 2%

Mali - - - - 1%

New Zealand - - - 2% 1%

Seats (32)

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R million) 6,6 7,8 8,3 6,2 5,4

Algeria - - 1% 9% 11%

Zambia 4% 8% 9% 11% 11%

Seychelles - - - - 11%

Singapore 19% 13% 20% 5% 10%

Zimbabwe 2% 1% 5% 5% 10%

Australia 7% 6% 3% 11% 9%


India - - - - 5%

USA 10% 26% 24% 8% 5%

Angola - - - - 4%

66

IMPO

RTS

IMPORTS BY COUNTRY OF ORIGIN

Imports of automotive products into South Africa remain a function of the success of the MIDP under its import/export complementation scheme, a function of domestic market demand and a function of currency movements. New vehicle sales in South Africa in 2010 increased by 24,7%. However, imports of CBUs, original equipment components to accommodate vehicle production, as well as re-placement parts for the growing vehicle parc (number of registered vehicles) of 9,8 million vehicles, remain high. The countries of origin of CBUs and automotive components imported into South Africa generally reflect the global linkages with the head offices of parent companies, except in the notable case of China where most of the imports were for replacement parts.

Import value and ranking by country – 2010 vs 2009

Country 2010 Ranking2010

R million2009 Ranking

2009R million

Germany R30 129,3 1 1 R23 982,2Japan R17 906,1 2 2 R13 821,3Korea Republic South R5 395,6 3 8 R2 999,9USA R5 253,3 4 6 R3 330,3China R5 151,7 5 5 R3 501,1United Kingdom R5 063,4 6 4 R3 750,9Thailand R5 020,7 7 3 R4 058,3Spain R3 773,6 8 9 R2 380,2Brazil R3 145,7 9 7 R3 106,7India R3 069,6 10 10 R1 806,1France R1 751,0 11 11 R1 559,6Sweden R1 599,9 12 16 R817,2Czech Republic R1 547,7 13 15 R910,7Italy R1 492,6 14 12 R1 530,8

14 COUNTRIES ABOVE R1 BILLIONBelgium R979,7 15 17 R745,7Austria R967,3 16 13 R1 030,4Poland R855,2 17 19 R608,0Taiwan R819,7 18 18 R725,4Mexico R794,4 19 26 R322,0Indonesia R789,4 20 21 R529,6Netherlands R650,5 21 24 R389,8Hungary R577,6 22 20 R577,2Romania R494,5 23 22 R502,9Argentina R459,9 24 37 R75,1Turkey R459,0 25 23 R407,0Philippines R426,3 26 29 R287,7Malaysia R341,0 27 31 R240,3Slovak Republic R327,3 28 28 R290,2Australia R285,6 29 27 R310,9Portugal R259,7 30 30 R259,2Switzerland R202,8 31 32 R167,3

67

IM

PORTS

Canada R176,6 32 25 R340,0Denmark R149,0 33 34 R101,8Israel R90,7 34 35 R91,1Finland R88,5 35 36 R89,1Luxembourg R71,4 36 41 R45,1Hong Kong R60,6 37 38 R74,1Slovenia R60,5 38 42 R45,0Singapore R56,3 39 39 R61,3UAE R35,0 40 14 R919,9Ireland R32,5 41 40 R55,6

68

IMPO

RTS

Vietnam R22,5 42 - R10,142 COUNTRIES ABOVE R20 MILLION

Source: AIEC, SARS

IMPORTS OF VEHICLES

Light vehicles (passenger cars and light commercial vehicles) were imported from 28 countries in 2010. The main countries of origin for the passenger cars and light commercial vehicles were Japan with 52 036 units followed by Germany with 49 446 units, South Korea with 21 975 units, the UK with 13 830 units and India with 13 168 units.

The nature of the South African vehicle parc, also defined as the number of registered vehicles, is changing under the MIDP. According to Response Group Trendline/NAAMSA, 19 brands from eight local OEMs were available in South Africa in 1995 and buyers in the passenger car segment could make 356 choices in the domestic market, compared to the 52 brands and 1 914 passenger car model derivatives available in 2010, the biggest ratio compared to its market size in the world. Inroads into the domestic market by imports, initially by the Koreans, have latterly been followed by the Indians.

Total passenger car and commercial vehicle imports increased significantly from 26 339 units in 1995 to 260 301 units in 2010. Imports of light vehicles increased from 6,6% in 1995 to 52,8% of total domestic new vehicle sales, of 492 907 units, in 2010. While this trend is indicative of the aim of the MIDP to encourage domestic companies to specialise in high volume models, obtain benefits of economies of scale in order to export competitively and in turn import the low volume models not manufactured in South Africa, the quantum of imports by OEMs not assembling in South Africa has far exceeded earlier projections. However, the domestic model mix can now be arranged to provide the most effective combination of domestically assembled and imported models to satisfy consu-mers. In value terms, Germany, Japan and South Korea remained the top three countries of origin for passenger car imports during 2010.

Light vehicle imports (passenger cars and light commercial vehicles) – 2006 to 2010

2006 2007 2008 2009 2010

Total value (R billion)(FOB) R30,3 R35,1 R25,8 R21,5 R33,3

Country of origin

Germany 32% 26% 28% 34% 24%

Japan 21% 21% 24% 22% 20%

Korea Rep South 11% 11% 9% 12% 14%

UK 7% 10% 12% 8% 9%

India 5% 2% 3% 5% 7%

USA 3% 5% 5% 4% 6%

Spain 7% 5% 3% 2% 3%

China - 5% 6% 1% 3%

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Thailand - 1% - 1% 2%

Belgium - - 1% 2% 2%

Other 14% 14% 9% 9% 10%

Number of light vehicle imports 306 455 312 855 254 633 196 246 260 301

Source: NAAMSA, SARS

As far as used vehicle imports are concerned, strict control measures ensure that only a limited number of legal import permits are issued to allow used vehicles into South Africa. In terms of current legislation, used vehicles qualifying for an import permit include those for returning residents and im-migrants, vintage cars, racing cars, donated vehicles for welfare organisations and adapted vehicles for persons with physical disabilities. Without a legal import permit, imported used vehicles cannot be registered on the National Transport Information System (NaTIS). The system also combats stolen and non-complying vehicle registrations. All vehicle-manufacturing plants in South Africa have been linked on line to the system to facilitate the collation of data of vehicles produced. Left hand drive vehicles are also not allowed into the country.

PARTS AND COMPONENTS – IMPORTS

Much of the strategic behaviour of OEMs in expanding market share in South Africa is directed at op-timizing their duty position. Minimising duty payments can be achieved in a number of ways. Firstly, OEMs can limit vehicle imports. Secondly, local content in domestically produced vehicles can be adjusted upwards. Thirdly, OEMs undertaking specified investments which qualify under the Pro-ductive Asset Allowance (PAA) receive import credits. Fourthly, OEMs can expand exports either of vehicles or automotive components and, by means of increased exports, reduce the liability of pay-ing duty on imports. These considerations have exercised a decisive effect on the strategic choices made by domestic OEMs.

The strong focus on the sourcing of components in the domestic market and the development of the local component supplier industry is important because it will reduce the risks associated with exchange rate fluctuations. The OEMs perceive increasing local sourcing levels in South African manufactured vehicles as a prerequisite for establishing a more sustainable productive base.

A large portion of the automotive imports comprises original equipment components, which are sub-sequently exported as CBUs after significant value adding processes. Original equipment compo-nent imports by the OEMs amounted to R37,9 billion in 2010. Imports of original equipment compo-nents originated mainly from Germany, Japan and Thailand.

Original equipment component imports (Chapter 98) – 2006 to 2010

COUNTRY 2006 2007 2008 2009 2010

TOTAL (R billion) 35,3 40,5 48,1 30,0 37,9

Germany 33% 30% 36% 35% 38%

Japan 27% 30% 25% 22% 22%

Thailand 9% 9% 9% 11% 9%

70

Brazil 8% 7% 7% 8% 6%

Spain 4% 3% 2% 3% 5%

Sweden 1% 1% 1% 1% 3%

Czech Rep 1% 1% 1% 2% 3%

UK 3% 3% 4% 3% 3%

USA 3% 3% 3% 3% 2%

Austria 2% 2% 2% 2% 2%

Other 9% 11% 10% 10% 7%

Source: AIEC, SARS

The increasing number of South African registered vehicles calls for more replacement parts for pas-senger cars and trucks. The following table reveals the increasing trend in the import of aftermarket replacement parts to complement the products not manufactured in the domestic market and more particularly to service the rapidly increasing imported vehicle parc for which most parts are imported. The growth of cheaper products, mainly from China, has exacerbated this trend. The growth of im-ported replacement parts is even more startling in real terms. After adjusting for the stronger Rand currency, imports in 2010 increased by 27% from 2009, and were also 11 % higher than 2008.

Top 10 replacement parts imported (R million) – 2006 to 2010

Part category 2006 2007 2008 2009 2010

Tyres 1 448 2 037 2 182 1 961 2 900

Engine parts 1 770 2 046 2 159 2 393 2 549

Automotive tooling 2 269 2 359 2 743 2 167 1 596

Leather and leather parts 1 027 1 140 1 565 1 018 1 139

Transmission shafts/cranks 374 491 1 556 1 116 1 076

Gauges/Instrument parts 761 875 2 641 978 984

Catalytic converters 452 418 696 632 903

Brake parts 750 1 059 860 730 774

Lighting equipment/parts 473 552 662 588 746

Engines 402 702 1 682 816 705

Other 10 059 12 031 12 903 13 557 13 946

Total 19 785 23 710 29 649 25 956 27 318

Source: AIEC, SARS

The following table reveals that the countries of origin of the replacement parts imported were aligned with the main countries of origin for new passenger cars and commercial vehicles. Imports from China, however, have increased, indicating the cost competitiveness of this increasingly dominant automotive force, not just in South Africa but in the global automotive arena in general.

71

Top 10 countries of origin for replacement parts imported – 2006 to 2010

Country of origin 2006 2007 2008 2009 2010

Germany 26,6% 25,1% 25,4% 25,9% 24,9%

China 9,6% 9,8% 9,9% 11,3% 14,1%

USA 8,7% 8,5% 11,0% 9,4% 9,0%

Japan 10,6% 9,5% 8,0% 7,8% 9,0%

Italy 4,8% 4,9% 4,4% 4,4% 3,5%

UK 5,0% 4,6% 4,6% 4,7% 3,5%

Thailand 3,0% 3,0% 2,6% 2,8% 3,4%

France 4,0% 4,9% 4,7% 4,1% 3,0%

Spain 2,8% 2,9% 2,5% 2,9% 2,9%

Taiwan 4,0% 3,3% 2,3% 2,4% 2,5%

Other 20,9% 23,5% 24,6% 24,3% 24,2%

Source: AIEC, SARS

MAIN AUTOMOTIVE TRADING PARTNERS

South Africa’s main automotive trading partners (exports plus imports) for 2010 reflected the coun-try’s global linkages with the OEM parent companies in Germany, Japan and the USA. Germany comprised R49,65 billion or 29,3% of South Africa’s total automotive trade in 2010, followed by Ja-pan with R21,33 billion or 12,6% and the USA with R20,97 billion or 12,4% of total automotive trade. The table below ranks the South African automotive industry’s top 10 automotive trading partners for 2010 compared with 2009.

South Africa’s main automotive trading partners – 2010 vs 2009

COUNTRYTOTAL TRADE 2010

(R billion)TOTAL TRADE 2009

(R billion)

1. Germany R49,65 R38,982. Japan R21,33 R17,403. USA R20,97 R19,084. UK R7,74 R6,155. Korea Rep South R6,18 R3,426. Spain R6,12 R4,467. China R5,38 R3,558. Thailand R5,07 R4,389. Brazil R4,02 R3,6710. France R3,49 R3,34Other R39,75 R36,47Total trade R169,7 R140,9

Source: AIEC, SARS

72

The following tables reflect details and rankings of the South African automotive industry’s top 10 automotive trading partners in 2010, reflecting the main products exported and imported, where ap-plicable.

1. Germany (Total trade R49 651,2 million) – 2010

Main products ExportsR19 521,9 million

Main products ImportsR30 129,3 million

Light vehicles 8 408,1 Original equipment components 14 576,8Catalytic converters 5 368,4 Light vehicles 8 163,8

Stitched leather parts 2 677,6 Engine parts 622,1Silencers/exhausts 357,4 MCV/HCV vehicles 446,1

Shock absorbers 296,2 Stitched leather parts 396,8Engine parts 279,4 Catalytic converters 307,6

Road wheels/parts 273,6 Gauges/instrument parts 292,0Tyres 206,6 Automotive tooling 286,5

Clutches/shaft couplings 186,9 Tyres 282,8Transmission shafts/cranks 127,6 Transmission shafts/cranks 273,1

Other 1 340,1 Other 4 481,7

2. Japan (Total trade R21 330,1 million) – 2010

Main products Exports R3 424,0 million

Main products Imports R17 906,1 million

Light vehicles 3 005,5 Original equipment components 8 350,9Catalytic converters 358,1 Light vehicles 6 764,7Silencers/exhausts 46,1 Tyres 525,6

Stitched leather parts 1,7 Engine parts 292,0Engine parts 1,1 MCV/HCV vehicles 279,0

Springs 0,8 Automotive tooling 173,1Brake parts 0,7 Filters 97,8

Tyres 0,7 Ignition/starting equipment 89,1MCV/HCV vehicles 0,6 Transmission shafts/cranks 86,2

Alarm systems 0,5 Engines 71,8Other 8,2 Other 1 175,9

3. USA (Total trade R20 971,5 million) – 2010



Light vehicles 13 229,0 Light vehicles 1 903,0Catalytic converters 1 478,4 Original equipment components 751,9

Engine parts 369,3 Engine parts 435,9Silencers/exhausts 141,1 Transmission shafts/cranks 208,4

Radiators 60,1 Tyres 180,6Axles 41,6 Catalytic converters 161,3

Lighting equipment/parts 36,6 Gauges/instrument parts 146,8

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Jacks 28,7 Automotive tooling 124,8Gear boxes 24,8 Engines 95,1

Tyres 23,9 MCV/HCV vehicles 78,9Other 284,7 Other 1 166,6

4. UK (Total trade R7 740,9 million) – 2010



Catalytic converters 1 202,9 Light vehicles 3 073,6Light vehicles 711,2 Original equipment components 1 006,3Engine parts 348,9 Engine parts 112,7

Automotive glass 66,1 Automotive tooling 99,3Stitched leather parts 52,5 Engines 87,7

Gauges/instrument parts 31,1 Gauges/instrument parts 72,2Tyres 20,4 Transmission shafts/cranks 43,3

Batteries 14,1 Tyres 35,0Engines 14,0 Ignition/starting equipment 29,1

Silencers/exhausts 11,5 Brake parts 25,3Other 204,8 Other 478,9

5. Korea Rep South (Total trade R6 179,8 million) – 2010

Main products Exports R784,2 million


Light vehicles 548,4 Light vehicles 4 705,7Catalytic converters 134,2 Tyres 177,2

Engine parts 76,6 Batteries 87,2Jacks 5,9 MCV/HCV vehicles 66,2

Automotive tooling 5,1 Automotive tooling 24,8Silencers/exhausts 3,8 Engines 23,7

Transmission shafts/cranks 0,1 Engine parts 20,7Other 10,1 Clutches/shaft couplings 20,6

Filters 17,3Silencers/exhausts 14,9

Other 237,3

6. Spain (Total trade R6 122,7 million) – 2010



Catalytic converters 1 715,1 Original equipment components 1 777,4Light vehicles 282,4 Light vehicles 935,4

Stitched leather parts 112,0 MCV/HCV vehicles 241,2Road wheels/parts 41,3 Tyres 164,3Silencers/exhausts 37,5 Brake parts 40,6Automotive glass 20,4 Lighting equipment/parts 39,8

Tyres 7,2 Engine parts 37,9

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Jacks 3,6 Stitched leather parts 34,4Filters 3,1 Body parts/panels 33,2

Radiators 1,5 Silencers/exhausts 22,2Other 125,0 Other 447,2

7. China (Total trade R5 383,7 million) – 2010



Automotive tooling 64,5 Light vehicles 893,1Filters 34,6 Tyres 879,3Jacks 16,9 Original equipment components 282,0

Alarm systems 15,7 Engine parts 255,3Shock absorbers 10,0 Automotive tooling 205,5

Catalytic converters 4,9 Road wheels/parts 129,8Transmission shafts/cranks 4,6 Brake parts 114,0

Silencers/exhausts 3,8 Stitched leather parts 110,7Radiators 1,6 Transmission shafts/cranks 109,1

Light vehicles 1,6 Car radios 88,9Other 73,8 Other 2 084,0

8. Thailand (Total trade R5 067,7 million) – 2010



Road wheels/parts 16,7 Original equipment components 3 351,0

Springs 2,8 Light vehicles 710,0

Tyres 2,0 Stitched leather parts 122,3

Ignition/starting equipment 2,0 Brake parts 69,5

Silencers/exhausts 1,3 Wiring harnesses 59,9

Light vehicles 0,9 Road wheels/parts 57,8

Axles 0,5 Car radios 52,9

Catalytic converters 0,4 Gauges/instrument parts 52,2

Stitched leather parts 0,3 Engine parts 49,9

Engine parts 0,3 Tyres 47,2

Other 19,8 Other 448,0

9. Brazil (Total trade R4 021,3 million) – 2010



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Engines 603,5 Original equipment components 2 236,7

Tyres 90,5 MCV/HCV vehicles 144,8

Engine parts 82,6 Engine parts 128,0

Transmission shafts/cranks 31,3 Axles 126,3

Silencers/exhausts 7,3 Light vehicles 118,3

Steering wheels/columns 4,8 Body parts and panels 84,9

Catalytic converters 3,3 Batteries 22,8

Gaskets 2,3 Transmission shafts/cranks 17,6

Gauges/instrument parts 2,0 Tyres 15,7

Filters 1,7 Clutches/shaft couplings 15,3


10. France (Total trade R3 487,2 million) – 2010



Light vehicles 877,8 Light vehicles 657,7

Catalytic converters 703,7 Original equipment components 223,6

Automotive glass 37,6 Axles 107,8

Silencers/exhausts 8,6 Tyres 105,9

Batteries 6,3 Engine parts 44,8

MCV/HCV vehicles 5,4 Brake parts 44,4

Brake parts 3,2 Transmission shafts/cranks 40,7

Filters 3,2 MCV/HCV vehicles 35,2

Tyres 2,4 Gauges/instrument parts 33,6

Transmission shafts/cranks 1,8 Automotive tooling 32,1


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TYPES OF CO-OPERATION

In view of the South African automotive industry’s trade pattern, many opportunities of mutual benefit exist for foreign companies to collaborate with South African automotive component suppliers. The exporting link for the majority of the multinational automotive component manufacturers in South Africa consists of the South African based OEMs and parent companies. Some of the locally owned component manufacturers have also been successful in obtaining OEM business, while many ot-hers focus on exports of replacement parts. The integration into the global group of the South African subsidiaries provides opportunities for business, produces synergies in several areas and accele-rates the exchange of knowledge, which will enable the domestic subsidiary to be more competitive in the global automotive environment. Consequently, component manufacturers using South Africa’s competitive advantages seek contact with outside partners for market access, technology, process know-how, production rationalization and other joint venture benefits. In addition, various other types of industry co-operation to pursue include:

• Technicalcollaboration in design of products, systems or production methods/layouts

• Researchanddevelopment

• Supplier/customerrelations

• Jointproduction

• Technologytransfer

• Licensesandpatents

• Marketingandco-operativepromotionofprojectsandmarketsharing

• Commercialrepresentation

• Franchising

• Financing

• Strategicalliance

• Thirdcountry collaboration

GENERAL INFORMATION

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South Africa had a vehicle parc (number of registered vehicles) of 9,8 million at the end of Decem-ber, 2010 of which 5,6 million or 56,9% comprised passenger cars. The 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 4 564 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 1 410 used vehicle outlets; about 304 vehicle component manufacturers, together with about 150 others supply-ing the industry on a non-exclusive basis; 1 588 specialist tyre dealers and retreaders; 483 engine reconditioners; 192 vehicle body builders; 2 907 parts dealers and around 220 farm vehicle and equipment suppliers.

South Africa was ranked 24th in respect of global vehicle production with a market share of 0,61% in 2010. Significant investment programmes driven by export plans have been implemented by all the OEMs since the commencement of the MIDP and capital expenditure by the OEMs from 1995 to 2010 amounted to R39,7 billion. Aggregate employment in the vehicle manufacturing industry in 2010 amounted to 28 128 persons at the end of 2010 whilst employment in the component manufac-turing industry was of the order of 65 000 employees. Total employment in the trade area, namely in the vehicle sales and vehicle maintenance and servicing field, amounts to about 200 000 persons. Employment in the tyre manufacturing industry is of the order of 6 600 persons. The automotive in-dustry exhibits a high multiplier effect due to the creation of opportunities in automotive and related areas and maintains direct linkages with a large number of support services and SMMEs. Employ-ment ratios vary from country to country, but generally for every worker in the manufacturing of a motor vehicle there are at least two or more employed in used vehicle sales, servicing and repair.

SOUTH AFRICAN AUTOMOTIVE INDUSTRY – OPPORTUNITIES AND CHALLENGES

The automotive sector, regarded as the leading manufacturing sector contributed, in total, 6,2% to the country’s GDP in 2010. The positive developments and achievements in the South African auto-motive industry, since 1995, have been driven by a supportive automotive policy regime in the form of the Motor Industry Development Programme (MIDP). The 2020 vision under the new Automotive Production Development Programme (APDP) (to replace the MIDP from 2013 onwards), shared by government and industry, is to double vehicle production from the 2006 levels of about 600 000 units to 1,2 million units by 2020, with a much stronger development of the automotive component sector.

South Africa’s consideration as a sub-contracting hub for the automotive industry includes the fol-lowing:

• Worldclasslogistics suitable for import and export operations• Excellentinfrastructure• Abundantandcostcompetitivelabour• Firstworldbusinesssector• Highqualityofficeandbusinessparkfacilities• Superiorqualityprivateschoolsandunmatchedqualityoflife

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Standard disclaimer

The trade data is based on eligible MIDP products. The AIEC cannot vouch for the accuracy of the information obtained from the source. Due to certain limitations, Customs and Excise statistics can-not always distinguish between automotive components eligible in terms of the MIDP and non-MIDP components. The main purpose of this trade data is to discern trends in exports and export destina-tions as well as imports and countries of origin.

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Published by AIECPO Box 40611Arcadia, 0007South Africawww.aiec.co.za

http://www.aiec.co.za

automotive export manual 2011

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