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Issue No. 30: May, 2013

1

the authority of the South Africanautomotive components industry

From the OfficeRoger Pitot

NAACAM held a workshop during AutomechanikaJohannesburg aimed at unpacking the APDP, which waschaired by your Executive Director, Roger Pitot, and attendedby 70 delegates.

The workshop, held on May 9th, was in two separate parts,the first being open to all interested parties, and the secondbeing only for industry stakeholders, mainly NAACAM andNAAMSA members, as well as government.

In the first session, Professor Justin Barnes introduced theAPDP and provided a comparison to the MIDP, which it replaced inJanuary this year. Justin was particularly well qualified to do this as heand Professor Anthony Black conducted the final MIDP study and madethe recommendations in 2008 for the structure of the APDP.

His presentation emphasised how critical it was for the South Africanindustry to achieve the targeted 1.2 million vehicle production as thiswould at least put the country on the global map to be considered forfuture vehicle production by the international OEMs. Along with thedoubling of vehicle production must come increases in local contentfrom the current level of less than 40% to at least 60%, as this wouldthen support the higher volumes and undoubtedly increase the industry’semployment.

Professor Barnes explained in great detail by means of examples exactlyhow the Production Incentive (PI) worked and the build up from thevarious sources and types of material value through the componentsupply chain to the OEMs. It was clear from subsequent questions andcomments that ‘the penny dropped’ for the first time for many of theattendees.

During the closed session, Justin provided an analysis of the first quarterresults of the APDP, breaking down the turnover, incentives and

employment by type of component. This is the first time that this kindof data has been available, and while the information was gathered fromonly about half the industry, it proved fascinating and generated muchdebate. From the next quarter it is likely that the data will cover around80% of the industry, and the tracking and comparisons will providemuch-needed facts to the authorities to enable decisions to be madein future adjustments to the programme.

Following this, Henry Pretorius added comments on behalf of NAAMSAwhich related to some of the issues flowing from the presentation, aswell as updating attendees on possible administrative changes whichwere imminent.

Finally, there was a panel discussion, the members being ProfessorJustin Barnes, Tinus van Zyl (ITAC), Jessie Swart (SARS), HenryPretorius (NAAMSA) and Roger Pitot (NAACAM). The questions fromthe floor ranged from simple to controversial, and it was clear at the endthat most of the audience had enjoyed the morning and many expressedtheir appreciation to NAACAM for holding this event.

In turn we want to thank all participants, particularly the panelists andof course Professor Barnes for sharing so much with us.

I have been the Executive Director of NAACAM for almost eightyears now, after several extensions of my original four-year contract!On one hand it seems longer, but in another way the years haveflown. So now it is time for me to retire from full-time employmentand spend more time with my wife, daughters and granddaughters.

I have realised for a while now that life is fragile and unpredictable,and our destinies are in God’s hands. This gets brought home alltoo frequently when I hear of another friend, or an acquaintancewho is younger than me who dies or gets a dreaded disease. I hadmy brush last year with cancer, but after a major operation I am sofar clear, and look forward to many more years.....but you never cantell.

I started with the Ford Motor Company in Port Elizabeth in October1970 and, despite the fact that it was the market leader and a verylarge firm, there was almost a family feeling within the variousdepartments, and we took great pride in telling people we workedat Ford. In those days South African manufacturing was highlyprotected and inward looking and very powerful, whereas now weare just a small part of automotive global supply chains, hoping for

contracts to be thrown our way sothat we can continue to producevehicles and components here.Perhaps we opened up our marketstoo quickly because the newgovernment wanted to show theworld something?

But let’s look to the future. Whateverit brings, you can rest assured thatNAACAM will continue to representcomponent and parts manufacturersas key stakeholders in the future ofthe automotive industry in SouthAfrica.

So it is with confidence in our strong and well-respected associationthat I will soon hand over to my successor who will, undoubtedly, bringfresh views and new ideas to assist us all in growing the sector toensure the future of the South African motor industry. I ask all of youto support the new NAACAM Executive Director in the same way youhave supported me.

2

Newsletter: May, 2013

AFRICA’S automotive manufacturing hub in the Eastern Cape is at theforefront of reducing the country’s carbon footprint.

The environment is not the only beneficiary as power intensivemanufacturers have begun to reap significant financial rewards ofCleaner Production programmes, spearheaded by the AIDC EasternCape, a subsidiary of the Eastern Cape Provincial government mandatedto assist its automotive industry become more globally competitive.

The AIDC has had a massive impact - reducing the overall energyconsumption of the manufacturing centre of Nelson Mandela Bay(including Port Elizabeth, Uitenhage and Despatch), by a whopping56.86 GWh over 3 years which is the equivalent of power supply to4 307 households per annum.

It has also identified, through free energy audits of Tier 1, 2 and 3suppliers during 2013, a further potential saving of 1 GWh. Theseprojects are yet to be implemented.

Moreover, the sector in that region, since 2010, has enjoyed a cumulativesaving of R26 million and AIDC Eastern Cape Supplier DevelopmentManager, Lance Schultz points out that these are sustainable.

“The energy crisis and higher rates has forced companies to completelyre-look and sometimes re-invent energy plans. Now these reformedand more carefully monitored ways of doing business is not only mitigating

the high power costs, but increasingly their levels of production efficiency,”Schultz said.

“With the government having set a target of reducing greenhouse gasemission by 42% by 2025 automotive suppliers will be under constantpressure to align but much has already been achieved in a relativelyshort time .”

Schultz says the AIDC EC is involved in a new partnership with theNational Cleaner Production Centre (NCPC) to develop and implementthe ISO 50001 energy standard in various companies across theautomotive sector in the Eastern Cape.

“With the implementation of ISO 50001, companies will have to monitortheir energy very effectively in order to keep certification and it is justa matter of time before ISO 50001 becomes a requirement for allmanufacturing businesses,” Schultz says.

Part of the Eastern Cape’s success in energy conservation stems froma dynamic partnership between the AIDC, NCPC and Eastern CapeAutomotive Cluster with regional companies eligible for free energyaudits.

The AIDC has also acquired an electrical power analyser to conductthese energy surveys themselves in order to engage on a higher levelwith the auto cluster companies. A number of these surveys have been

First National Battery has made a paradigm shift from the traditionallead-acid battery formation process (the first time charging of a battery)with the introduction of acid recirculation technology for the formationof truck batteries and traction batteries as used in forklifts and mininglocomotives, as well as for the formation of solar and gel batteries. Thisgreen production process is now in use at two of its factories in SouthAfrica.

Green production - innovative battery charging technology on acidreticulationUnlike the normal battery charging process, the system embraces aclosed formation process that doesn’t negatively impact the environmentwith acid fumes. It’s the perfect example of environmentally successful,state of the art equipment.

Forming traction batteries individually as cells or as complete batteriesin tailor-made fork truck tanks has dramatically cut the delivery time offinished products to customers. The acid recirculation process contributesto reducing the process time in the production of commercial vehiclebatteries.

Reaping the benefitsBecause formation time has been shortened considerably, the deliverytime to customers is much improved.

Quality is guaranteed by using a completely digital system that controlsacid density and temperature profiles throughout the entire process,resulting in uniform cell to cell voltages. High charging currents are alsoused which contribute to a shorter battery formation time. Fewer productionprocesses are required, which means less work in progress and noneed to carry high stock levels.

Another South African firstThese new green production units are the first of their kind installed inAfrica. They are modular and can be expanded as demand dictates.The process combines uniform and reputable quality with high productivityand high environmental compatibility.

Dr Louis Denner, Managing Director of First National Battery commented,“The charging of batteries with acid recirculation is one of the bestinventions of lead-acid battery manufacturing technology in the last twodecades and it is truly a green process with no harmful emissions to theenvironment. Furthermore, it is in line with the manufacturing excellencephilosophy of our holding company, Metair Investments (Pty) Ltd.”

Another first for First National Battery, proving once more that ‘ThroughCaring We Lead’.

For more information, visit First National Battery’s websitewww.battery.co.za or call 0800 112 600 toll free.

First National Battery leading the charge with new greener technology

Formation of truck batteriesand the system forming truckbatteries

EASTERN CAPE AUTO SECTOR LEADING LIGHTIN ENERGY REDUCTION

3


According to President ofNAACAM MpuelengPooe’s report and outlookfor 2013, we’re encour-aged to “continue to worktogether towards theongoing improvementand growth of automotivecomponent production inSouth Africa”.

PwC supports th issentiment and welcomesthe opportunity to assistautomotive component suppliers to produce a zero-defect product for thelocal and international market. PwC’s skills base includes qualified andexperienced specialists capable of delivering a wide spectrum of businessproducts and services aligned to variousquality standards,TS/DQS 16949 which includes VDA 6.1.Sheila Riekert, a Senior Consultant withPwC, has extensive experience in theautomotive component manufacturingsector. Sheila has a degree from RhodesUniversity and a post-graduate qualificationfrom The Graduate Institute of Management& Technology. Most of her work experience,gained in the Automotive sector, includesstart-up operations in the Eastern Cape andNorth Africa. She ensured that all the HumanResources and Training processes werealigned to the relevant quality standardsfrom the outset. This has proven key in laying the foundations for theclient to achieve 100%/A-rating results in both their customer OEM auditsas well as in international quality systems audits. Her experience includesbusiness transformation and related organisation design and alignment.These interventions are especially highly beneficial to companies in theramp-up phase of new projects and when management is required to takethe organization to a new level.

One cannot over-emphasise the benefits of aligning businessprocess/systems to quality standards such as TS/DQS 16949. The qualitysystem requirements include documented evidence of well-trained, highlymotivated people, on-going continuous improvement activities, high qualitystandards and stable production processes. These elements, when properlyimplemented, are the formula for producing zero-defect products.

For more information contact Sheila Riekert on 043 707 9600or [email protected] http://www.pwc.com/za

It is with great sadness that we heard of the death of Errol Richardson,a prominent South African motor industry man of many years standing,a man of integrity, passion and vibrancy. Errol died of a heart attack onFriday 10th May.

Errol had been with the NAACAM delegates at the APDP workshop atAutomechanika the day prior to his death.

A number of us had the privilege of his friendship, he dropped in forcoffee and a chat, analysed rugby matches during half-time at Sharksgames and shared his knowledge and expertise of the motor industry.

Errol’s background comprises years served with General Motors, Fordand twenty-five years with McCarthy. He was a former chairman of theNational Automobile Dealers Association, former President of the MotorIndustries Federation which became the Retail Motor Industry organisation(RMI) and he was the retail member of the Motor Industry Task Groupwhich set in motion the formulation of the Motor Industry DevelopmentPlan (MIDP).

Roger Pitot’s Memories of ErrolI worked at Ford when Errol joined in the 1970s and although I was inFinance and he was in Marketing, we often met to discuss why hewanted to spend money on this or that marketing programme.

After losing contact with him for a number of years, Errol and I met againduring the Motor Industry Task Group discussions in 1993, where herepresented the interests of the retail sector and I was on the NAAMSAside. Thereafter we kept in touch occasionally, but after I joined NAACAMin 2005 he was a regular visitor to our offices as we are close to JoburgAirport. We would exchange memories, discuss what was happeningin the industry and how we could fix it! He loved networking and someyears ago he organised a ‘Ford Retreads’ dinner, an idea he got fromthe USA where ex-Ford employees get together to reminisce.

On another occasion he called me to ask if I would like to meet with J.D.Power (Errol had been instrumental in introducing the J.D. Power qualitysurveys in South Africa). This was to be at the airport while he was intransit from Korea to the USA. Errol was supposed to join us for breakfast,but his plane from Durban was cancelled, so I had Mr. Power alone fortwo hours. It turned out he had started his career as a financial analystat Ford, as had I, so we got on very well.

Errol was enthusiastic and passionate about many issues, particularlywhere he believed something should be done to improve a situation.Some of this feeling can be seen in the columns he wrote for CarMagazine in 2009 and 2010, but also in the many committees andgroups he was involved in over his long career.

Earlier this month Errol called me to ask if he could attend the NAACAMAPDP Workshop at Automechanika, particularly the second sessionwhich was only open to current industry stakeholders, and of course Iagreed. I think he asked more questions and passed more commentsthan anyone after the first presentation

We had a long chat after the workshop about my impending retirementand he said he would miss his visits to NAACAM to talk about old times.Little did we realize......Goodbye, Errol

conducted across Tier 1, 2 and 3 automotive suppliers in the EasternCape with savings of over 1 GWh identified.

“The Cleaner Production programme has provided very tangible resultsfor the environment and industry and the AIDC will continue to interactwith as many companies as possible to ensure that the auto sectorsupports the vision for the Province to be the capital of clean energy forthe country,” Schultz said.

Department of Economic Development, Environment and Tourism EasternCape MEC Mcebisi Jonas said the green economy was a priority. “Thedepartment has enhanced its economic planning and research capacityand has successfully used this to promote the province as a hub forinnovation, renewable energy, and a rapidly growing green economy.”

Noting catalytic converters and alternate energy, including the manufactureof Photo Voltaic Cells, Jonas said several industries had recently madetheir home in the province.

He said the department of energy required 26% of the country’s energymix to consist of renewable energy by 2030. “Of the national allocationunder the National Integrated Resources Plan, 67% of the country’s newalternate energy needs will be generated in the province through11 wind farms and a solar photo voltaic farm,” Jonas said.

Working towards growth

Errol Richardson, RIP

4


SHARKS ACADEMY GETS HUGE BOOSTFROM G.U.D. HOLDINGS

The Donaldson Cross CountryChampionship returned to theEston area, on the outskirts ofPietermaritzburg, for the first timein three years with the running ofthe Toyota Dealer Sugarbelt 400on May 17 and 18. The event was run in the Dundeearea in 2011 and moved toRichmond last year. The race isround three of the Donaldson Cross Country championship and hasspecial significance for Pietermaritzburg, the Team Castrol Toyota andFord Racing teams. Pietermaritzburg, one of the oldest Victorian citiesin the world, this year celebrates its 175th birthday and is home basefor the championship topping Ford Racing team. Ford Racing won the first two races of the season via local crewLance Woolridge and Ward Huxtable and former South African championsChris Visser and Japie Badenhorst. Honour was preserved when a Team Castrol Toyota crew won theToyota Dealer Sugarbelt 400, round three of the Donaldson CrossCountry Championship, with a Ford Racing team retaining their lead inthe Production Vehicle and Class SP championships. Both factory teams can lay claim to the KwaZulu-Natal outing as ahome race with Team Castrol pair Anthony Taylor and Dennis Murphyedging out the Ford Racing Ranger combination of Chris Visser andJapie Badenhorst. There were smiles from Team Castrol Toyotasupporters - and sighs of relief - when Taylor and Murphy broke the iceto give the squad its first win of the season.

BENTELER SOUTH AFRICA (Pty) LtdRalph Streitburger, Sales Directore-mail: [email protected]: +27 (0)11 617 8602Fax: +27 (0)11 864 667613 Bentonite Street, Alrode Ext 7, Alberton, 1448PO Box 213, Alberton, 1448Website: www.benteler.com

The company manufactures safety critical sub assembly componentsas well as catalytic convertor pressings.Quality Rating: ISO TS 16949/ISO 14001/OSHAS 18001

BLUE STRATA TRADINGLaura Watson, Business Development Consultante-mail: [email protected]: +27 (0)11 245 5894Fax: +27 (0)11 245 575166 Wierda Road East, Wierda Valley, Sandton, 2196Website: www.bluestrata.co.za

Blue Strata facilitates the import transaction from order placement,confirmation and tracking through to the hedging of foreign exchangerisk and the management of import logistics until delivery to yourwarehouse. On delivery of the goods, the company provides a singleinvoice consolidating the total landed Rand cost per item, effectivelybecoming a local supplier of your imported product. By financing thecost of goods as well as the forwarding and clearing costs involved inthe import transaction, Blue Strata releases your working capital that istied up in your import and provides you with payment terms that closelymatch your cash flow cycle.

PricewaterhouseCoopers IncorporatedKobus Minie, Partner/Directore-mail: [email protected]: +27 (0)12 429 0000Fax: +27 (0)12 749 822332 Ida Street, Menlo Park, 0081PO Box 35296, Menlo Park, 0102Website: www.pwc.co.za

PwC is a professional services firm that has its fingers on the pulse ofthe automotive industry - a firm that is knowledgeable about the industry’sfundamental business issues, and the implications of decisions thatthese companies must make from anywhere in the world. Consideringour audit relationships, tax assistance or advisory services, the distinctiveexperience we deliver to our industry-leading clients is unsurpassedaround the world. Our automotive industry expertise is derived fromdelivering professional services to the world’s most prominent automotivecompanies.PwC has a significant presence in every major market, both establishedand emerging, which makes us a global powerhouse with an unmatchedability to serve global, national and local clients.In South Africa our offices are in Bloemfontein, Cape Town, Durban,East London, Johannesburg, Kimberley, Lichtenburg, Mafikeng,Middelburg, Nelspruit, Paarl, Pietermaritzburg, Polokwane, Port Elizabeth,Pretoria, Robertson, Richards Bay, Rustenburg, Stellenbosch, Welkom,and Worcester. In addition, we are the only professional services firmwith offices in all nine provinces of the country.Services: Assurance, Advisory, Tax

ZF SACHS South Africa (Pty) LtdEkhard Herrmann, Managing Directore-mail: [email protected]: +27 (0)11 389 4900Fax: +27 (0)11 389 497118 Bentonite Street, Alrode Ext 7, AlbertonPO Box 123908, Alrode, 1451

The company manufactures clutches and automotive parts.Quality Rating: ISO 9001:2008/ISO TS 16949/ISO 14001

n Friday 5 April 2013, G.U.D. Holdings (Pty) Ltd issued a R800,000sponsorship to the Sharks Academy. Red Shuttleworth, CEO ofG.U.D. Holdings presented the cheque to Sharks Academy

Managing Director, Hans Scriba in front of 30 000 Sharks fans on matchday.

The sponsorship furthered G.U.D.’s commitment to investing in youthdevelopment through education. Fifteen disadvantaged rugby and soccerplayers will receive a full sports and education scholarship at the SharksAcademy in 2013. The bursaries include professional sports training atthe Sharks Academy and a tertiary education through Varsity College.

“Our initial investment in The Sharks Academy in 2012 gave 7 rugbyplayers and 6 soccer players from Umlazi, Inanda and KwaMashu anopportunity of a lifetime, a further education and sports training at apremium sports training academy. We have already been rewarded withone of the rugby bursary recipients earning a senior contract to play forThe Sharks in 2013,” Said Red Shuttleworth. “We look forward to moresuccess stories through our sponsorship.”

G.U.D. Holdings is the holding company for three premium automotiveparts brands; Fram Filters, GUD Filters and Safeline Brake pads. Aproudly South African company which supports corporate socialresponsibility programmes that assist with the development of our youththrough education ensuring the future growth of South Africans.

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DONALDSON CROSS COUNTRY CHAMPIONSHIPBACK IN ESTON

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VEHICLE EXPORTS: 2010 - April 2013 (incl.)

Babcock 0 0 0 5 0 5Fiat 68 17 19 5 0 5Ford 1,365 3,494 31,925 2632 7082 9714GMSA 999 1,044 1,622 261 0 261International 10 13 0 0 0 0Iveco 94 46 72 16 0 16Mahindra 65 74 16 0 0 0MAN 197 154 229 150 0 150Mercedes-Benz 9 2 1 0 0 0Mitsubishi 0 0 0 17 0 17NC2 Trucks 0 0 2 5 0 5Nissan 9,165 12,343 16,355 5868 516 6384Powerstar 11 97 61 34 0 34Renault 0 0 24 0 0 0RenaultTrucks 9 4 15 19 0 19Scania 161 142 230 64 0 64Tata 28 16 28 31 0 31Toyota 45,369 67,195 73,726 14898 11267 26165UDTrucks 240 244 83 79 0 79VDL 8 3 1 0 0 0Volkswagen 1 0 0 0 0 0Volvo 12 40 58 3 0 3Total 57,811 84,928 124,467 24087 18865 42952

COMMERCIAL VEHICLES

Into Out of to 04/Manufacturer 2010 2011 2012 Africa Africa 2013

BMW 38,206 41,886 33,297 0 19,848 19,848Chrysler 135 257 471 120 0 120Fiat 121 101 58 8 0 8Ford 9,742 2,938 0 0 0 0GMSA 304 544 581 210 0 210Honda 0 265 348 117 0 117Jaguar Land Rover 0 0 1 0 0 0Mahindra 3 1 3 0 0 0Maserati 0 0 1 0 0 0Mercedes-Benz 38,921 36,413 49,825 0 12,583 12,583Mitsubishi 0 0 0 38 0 38Nissan 75 225 131 24 0 24Porsche 3 2 3 1 0 1Renault 7 0 0 0 0 0Subaru 1 0 2 1 0 1Toyota 17,335 19,746 14,396 2,465 1,075 3,540Volkswagen 76,788 81,155 54,058 0 17,748 17,748Volvo Cars 13 2 21 2 0 2Total 181,654 183,535 153,196 2,986 51,254 54,240

Into Out of to 04/Manufacturer 2010 2011 2012 Africa Africa 2013

PASSENGER CARS

Please note: Figures for Mercedes-Benz in all tables are estimates

Supreme Spring recently won bronze for coming in 3rd place (a tie withWillard) at the Automechanika innovation competition which took placeat South Africa’s Leading International Trade Fair for the AutomotiveIndustry.

According to Wynter Murdoch, convener of the Innovation Awards, theproducts assessed as finalists in the competition were found to allcontribute in one way or another to advancing automotive progress,either by pioneering aspects of safety, environmental friendliness, orease of use, or by making significant breakthroughs in terms ofdevelopment or benchmark standards.

Through the Cobra Suspension brand, Supreme Spring offers to themarket an array of products for standard, road and off road vehicleenthusiasts including racing applications; products that seek to fulfilsuspension requirements not met by the standard OE suspension setup, for instance:

• Increased ride height and load carrying capacity for LCV off-roadapplication.

• Lowered suspension, adjustable damper, rebound and camber forroad and racing car applications.

• Standard after market replacement springs for both passenger andLCV (Bakkie) vehicles.

Supreme Spring is proud and humbled to have been considered worthyof the bronze title and will continue to make products that embody theuniquely South African flair and to actively contribute to the advancementof automotive technology, safety and environmental friendliness.

Our sincere gratitude goes out to the assessment jury team Dr. RichardBeän of UNIDO; Christopher Crookes of Extra Dimensions; John Ellmoreof the RMI; David Furlonger of the Financial Mail; Dr Norman Lamprechtof NAAMSA, Jeff Osborne of the RMI, Roger Pitot of NAACAM and toAutomechanika SA for affording South African manufactures such asourselves a platform such as this to further encourage innovation.

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Supreme Spring’s Cobra Suspension wins Bronze for innovation.

APDP PRCC Claims - Auditor's Assurance

ITAC will now accept PRCC claims with the auditor's assurance reporteven though it is provisional.

Should your auditor not be aware of this you can refer them to:

Tinus van ZylInternational Trade Administration Commission

Tariff Investigations IIPrivate Bag X753, Pretoria, 0001

Tel: (012) 394 3691 Fax: (012) 394 [email protected] http://www.itac.org.za/

RETAIL SALES: 2010 - April 2013 (incl.)

2010 2011 2012 to 04/2013 2010 2011 2012 to 04/2013Babcock 0 132 0 0

Chana 736 363 95 0

Changan 0 57 96 0

Chevrolet 10,234 17,996 19,324 6,225

Citroen 0 86 193 53

DAF 41 0 86 34

FAW 0 0 0 88

Fiat 1,009 598 593 311

Ford 14,579 14,764 16,545 6,870

Freightliner 829 1,312 1,272 451

Fuso 1,083 986 965 356

Hino 2,570 3,103 3,295 1,172

International 615 849 576 131

Isuzu 13,059 15,988 16,515 5,514

Iveco 713 913 1,079 430

JMC 0 0 0 288

Land Rover 484 628 776 216

Mahindra 1,014 1,321 2,294 857

MAN 1,512 1,866 1,719 488

Mazda 3,835 3,772 1,961 1,019

Mercedes 4,279 5,275 5,479 1,651

Mitsubishi 1,963 1,558 958 548

Nissan 22,151 22,827 29,173 9,747

Opel 5,390 307 231 70

Peugeot 286 413 413 184

Powerstar 150 181 484 156

Renault 134 145 644 183

Renault Trucks 0 298 0 0

Scania 1,045 1,293 1,332 533

Ssangyong 0 0 40 18

Tata 2,386 2,573 3,118 1,456

Toyota 47,999 52,709 50,965 19,005

UD Trucks 2,152 3,234 2,992 903

VDL Bus/Coach 19 24 33 11

Volkswagen 3,738 9,887 9,710 3,072

Volvo 1,143 1,525 1,615 508

Total 145,151 166,983 174,571 62,548

Abarth 0 5 107 36Alfa Romeo 331 812 944 230Audi 11,366 14,531 16,743 6,204BMW 22,622 23,560 24,744 8,883Cadillac 39 2 0 0Chana 120 348 58 0Chevrolet 21,713 29,754 31,175 7,337Chrysler 586 590 584 220Citroen 1,601 1,941 1,945 527Dodge 1,774 2,086 1,765 326Ferrari 0 0 0 38Fiat 2,030 2,678 3,198 1,121Ford 18,001 26,679 25,891 9,845Honda 8,335 7,828 9,093 4,788Hummer 75 5 8 0Infiniti 0 0 127 78Jaguar 566 520 909 435Jeep 2,735 4,383 7,237 2,708Lamborghini 11 0 0 0Land Rover 4,349 5,133 6,686 2,702Lexus 1,393 1,178 1,371 275Mahindra 541 451 1,447 435Maserati 63 72 65 22Mazda 7,225 4,790 4,827 839Mercedes 22,954 23,509 22,420 7,187Mini 1,783 2,509 2,794 983Mitsubishi 2,397 1,734 2,619 1,034Nissan 12,267 17,065 20,627 7,272Opel 4,207 4,365 2,704 646Peugeot 2,546 2,813 3,393 1,290Porsche 693 1,131 1,435 826Renault 10,001 10,347 10,216 2,602Saab 11 0 0 0Smart 97 124 133 28Ssangyong 0 0 80 99Subaru 1,420 1,250 861 342Suzuki 4,945 5,462 4,724 1,662Tata 2,898 1,909 2,795 1,376Toyota 48,681 52,424 65,645 21,283Volkswagen 55,657 75,495 82,363 29,117Volvo 3,048 3,240 2,984 927Total 314,740 330,723 364,717 123,723

PASSENGER CARS COMMERCIAL VEHICLES

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The AIDC Eastern Cape has announced plans to initiate a study that isexpected to have important repercussions for the South African Automotivesector.

The study seeks to determine possible impediments to the growth of localcontent in vehicles produced in South Africa. In some models localcontent is as low as 30%, with growing job losses in the industry addinginsult to injury.

The AIDC Eastern Cape is an agency of the Eastern Cape DevelopmentCorporation established to assist government and industry achieveeconomic growth and global competitiveness in the automotive sector.

The study will survey suppliers and stakeholders within the automotivemanufacturing hub of the Eastern Cape.Lance Schultz, AIDC Supplier Development and Supply Chain Managersaid the survey was of vital importance as it sought to augment existingstrategies and would be used to support future investments into growing

the strengtH of the local content base in the region.“The 12th annual study on Supplier/OEM relations internationally highlighteda trend showing strained relations in many instances and improved workingrelationships between OEMS and suppliers, in others.,” Schultz said.

He said key areas of the AIDC survey will include the impact of electricitytariff increases, supplier competitiveness factors, purchasing functioncompetence requirements as well as OEM supplier relationship factorsamong others.

Study leader Zahier Ebrahim said the survey questionnaire, endorsed byNAACAM, had gone through an iterative process with particular emphasison suppliers with the aim of ensuring that the data collected can illuminatethe problems faced.

He said research and questionnaires, already workshopped with focusgroups, would be conducted with Eastern Cape automotive suppliersduring May with the results due to be finalised “within three months”.

IMPORTANT SURVEY FOR AUTOMOTIVE SECTOR

Vehicle Sales History: 2008 - April 2013 (incl.)

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2008 2009 2010 2011 2012 2013Jan 30,439 20,618 23,764 27,564 29,003 32,436Feb 27,540 18,153 22,001 28,753 29,443 30,683Mar 27,790 21,272 24,172 30,393 31,899 31,860Apr 24,104 15,086 19,277 22,323 23,185 28,744May 22,675 16,485 20,786 24,248 28,643Jun 23,050 19,029 21,745 26,642 30,006Jul 25,999 18,822 24,023 26,577 31,389Aug 25,298 18,778 27,985 30,342 33,927Sep 25,334 20,255 23,665 31,562 33,038Oct 23,075 20,828 24,697 29,683 35,240Nov 20,107 19,304 23,960 26,961 31,505Dec 19,653 16,075 23,006 25,655 27,439Total 295,064 224,705 279,081 330,703 364,717 123,723


2008 2009 2010 2011 2012 2013Jan 1,105 586 456 615 564 733Feb 1,256 898 590 889 942 888Mar 1,313 673 757 932 961 977Apr 1,277 694 522 578 701 858May 908 529 740 720 918Jun 1,077 493 735 704 830Jul 1,036 558 619 716 777Aug 888 540 586 688 784Sep 858 545 617 819 740Oct 811 627 630 782 841Nov 858 535 789 801 859Dec 743 551 516 618 737Total 12,130 7,229 7,557 8,862 9,654 3,456

2008 2009 2010 2011 2012 2013Jan 455 296 247 253 253 329Feb 614 436 317 385 462 422Mar 692 361 400 483 426 394Apr 665 314 298 396 364 406May 537 283 366 416 400Jun 716 390 385 424 461Jul 729 360 368 388 468Aug 541 282 544 420 349Sep 581 302 373 462 469Oct 503 280 378 426 567Nov 534 265 402 372 425Dec 390 270 335 279 338Total 6,957 3,839 4,413 4,704 4,982 1,551

2008 2009 2010 2011 2012 2013Jan 1,025 650 559 704 865 858Feb 1,339 713 851 1,010 1,032 983Mar 1,422 610 993 1,212 1,142 1,147Apr 1,434 503 752 979 990 1,233May 1,417 592 820 1,022 1,188Jun 1,425 643 760 1,285 1,211Jul 1,442 807 781 1,097 1,150Aug 1,407 662 844 1,162 1,055Sep 1,448 742 957 1,210 1,074Oct 1,280 659 1,031 1,257 1,100Nov 1,148 661 1,017 1,080 1,190Dec 785 624 686 716 766Total 15,572 7,866 10,051 12,734 12,763 4,221

Excluding Exports2008 2009 2010 2011 2012 2013

Jan 8,573 7,683 6,775 7,547 6,359 10,200Feb 14,316 10,761 9,839 17,669 13,289 16,520Mar 15,181 11,517 16,160 19,146 11,845 14,247Apr 16,633 8,920 14,556 14,044 9,146 13,273May 17,289 11,655 19,440 16,252 11,850Jun 17,910 9,270 16,539 18,926 14,691Jul 19,711 7,985 18,419 15,602 13,956Aug 17,342 5,717 14,212 16,936 14,829Sep 19,628 9,729 9,299 19,134 13,907Oct 19,328 16,022 22,112 16,559 15,547Nov 18,718 18,167 20,575 14,197 17,083Dec 11,041 11,176 13,728 7,523 10,694Total 195,670 128,602 181,654 183,535 153,196 54,240


2008 2009 2010 2011 2012 2013Jan 11 3 7 3 3 3Feb 13 12 2 9 10 39Mar 15 8 10 8 16 15Apr 16 13 11 4 4 3May 20 4 3 8 32Jun 7 21 9 4 14Jul 13 17 0 20 13Aug 11 10 12 21 4Sep 3 6 8 13 17Oct 12 14 13 14 26Nov 6 4 6 26 25Dec 2 23 8 2 1Total 129 135 89 132 165 60



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ith the revised codes of good practice scheduledto be gazetted in August or September 2013,businesses continue to be in limbo regardingsome of the revisions in this importanttransformation legislation. The Department of

Trade and Industry (dti) has held a number of sessionsafter the close of the public commentary process tofurther understand and, at the same time, convincebusinesses and industries to comment and or acceptdti’s rationale on a number of points that are in dispute.The dti, of their own admission, has confessed that thebulk of concerns and questions that have been asked atthe various sessions around the country are of the samenature and require thorough consideration and review.Be that as it may, the codes are scheduled to be gazettedbefore the end of the 2013 calendar year, in what shapeor format, remains to be seen.

The revised codes in their current format propose thatownership, skills development and enterprise and supplierdevelopment be treated as priority elements, which carriesa 40% minimum threshold. In other words, if a businessdoes not score the minimum points in any of these threeareas, they drop a level if they are a Qualifying SmallEnterprise (QSE) and two levels if they are a businesswhose turnover is above R50 million. The impact of thisrevision brings challenges in the motor industry as follows:

The ownership element which now carries 25 points iskey to some of the businesses in the motor industry. Asimple example is that if a business has 7% blackownership and is currently a level four will drop to a levelsix because they do not have at least 10% blackownership. In this example, depending on theshareholders appetite on ownership issues, this revisionmay discourage black participation in the business in theform of shareholding and thus stifle transformation. Itmay be the opposite though, in some instances.

The current gazetted codes of good practice allowsbusinesses to claim learnership/apprenticeship salariesas part of the skills spend in the skills development areaand therefore encourages businesses to equip youngpeople with skills. This not only assists apprentices butalso grows the motor industry in terms of the desperatelyrequired skills base. Considering that the revised skillsdevelopment code disallows these claims as BEE spend,this may to some extent, encourage businesses to limitthe intake of these apprentices and thereby affecting the

skills growth in the industry which the country desperatelyneeds.

The current procurement rules have a section that relatesto imports and why they should be excluded from theTotal Procurement Measured Spend (TPMS) whencalculating the procurement scorecard. Any products orservices that cannot be sourced locally due to whateverreasons cannot be part of BEE spend. The rationalebehind this is that a business cannot be penalised forpurchasing from a foreign business which does have anyBEE credentials. In the revised codes, this advantage isbeing removed and therefore imported goods and serviceswill now form part of TPMS. The effect of this move, ifit passes the test is that total BEE spend will increasedue to imported spend being treated as local spend andtherefore affect the procurement score negatively. Anegative score in this area depending on whether it isabove or below the 40% threshold could carry a reductionin the BEE level. Furthermore, it could affect thecustomer’s score on their scorecard. Possibilities arethat there are a number of businesses in the motorindustry who will not be able to meet this criteria as theyare known to be importing most of their parts from theirmanufacturers abroad.

The second concern in the ESD area is whole issue ofvalue-adding suppliers (VAS) a term used by DTI to‘promote’ certain businesses in terms of their procurementscorecard. Reading into the term in simple language,VAS rewards those businesses with high labour costs.The current formula for calculating a VAS unless changedin the revised codes states that if ‘total labour costs addedto net profit before tax is 25% or more of turnover’ thiscompany is regarded as a VAS. In some researchesdone, almost 70% of large companies do not meet thiscriteria. The motor industry, highly mechanised industriesand oil companies, in general, cannot in any way comeclose to meeting this requirement.

In conclusion, the revised codes could, if gazetted in theircurrent format, have certain unintended consequencesin the motor industry such as fronting especiallyconsidering the issues around imports and the fact thatthese purchases now need to be included as part ofTPMS. The VAS factor could discourage businesses tonot even try and transform as their BEE certificates maynot be considered by their customers because of thebusiness not being able to meet the 40% threshold.

THE REVISED BEE CODES - Impact on the Motor Industryby Trevor TshabanguDirector: Transcend Corporate Advisors

Transcend Corporate AdvisorsTel: +27 (0)11 442 2433 Cell: +27 (0)82 553 3224 e-mail: [email protected]

www.transcend.co.za

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