FDI in Automotive sector to continue climbing

Concept Cars at Johannesburg Motor Show

More than R3,5-billion will be invested by international motor manufacturers in South Africa during 2004, underlining the automotive industry's importance as a magnet for foreign direct investment, employment creation and foreign exchange earnings.

Toyota Formula One Racing Car

The investment in 2004 is considerably up on the R2,3-billion invested in 2003, and Auto Africa 2004 exhibition director Pula Dippenaar expects South Africa to continue to attract investments as the country consolidates its position as a manufacturing and distribution centre for the global automotive market.

Auto Africa is Africa's premier automotive trade and consumer exhibition and is endorsed by the National Association of Component and Allied Manufacturers (NAACAM), the National Association of Automobile Manufacturers of South Africa (NAAMSA) and the Retail Motor Industry Organisation (RMI) and its twelve constituent associations. Auto Africa also enjoys the support of Trade & Investment South Africa (TISA), the Automotive Industry Export Council (AIEC) and the Auto Industry Development Council.

Auto Africa provides an important platform for the automotive market to showcase its capabilities on a global scale. South Africa has become the recognised gateway for automotive trade throughout Africa, attracting an increasing number of foreign trade visitors to Auto Africa. In 2002 more than 750 foreign trade delegates from 40 countries attended the show. Auto Africa Expo 2004 expects to attract upwards of 1000 foreign trade visitors from 50 countries,” she says.

Dippenaar says foreign direct investment and the commitment of many of the world's leading automotive companies to increasing their manufacturing capability have been among the key drivers that have revitalized the local automotive industry.

Cars on Show in Johannesburg

The Department of Trade and Industry automotive director, Gustav Meyer, agrees. He says the impressive commitment by manufacturers, the industry’s flexibility towards short-run production, a low-cost manufacturing base, the Motor Industry Development Plan (MIDP) and other trade arrangements such as the African Growth and Opportunity Act (Agoa) have all played positive roles.

“The inflow of foreign direct investment looks set to continue. The extension of the MIDP to 2012 has provided a stable policy framework for future planning and a long-term window for original equipment manufacturers to invest in so-called ‘next generation’ models from 2005 onwards,” says Meyer.

When General Motors acquired the remaining 51% of the Delta Motor Corporation in this year it became the last automotive multinational to take control of a domestic subsidiary. "The presence of the ‘Detroit big three’ vehicle manufacturers can be seen as a massive vote of confidence in the country and its industrial policies,” says Dippenaar.

Ford was the first original equipment manufacturer to invest under the MIDP in 2003 to the tune of R1-billion. Toyota has already invested about R1,2-billion into its export capabilities in the country and the company has announced another R3,5-billion investment for South Africa, as one of five worldwide locations approved by the Toyota Motor Corporation for production of the new generation light vehicle.

General Motors is to invest R1,5-billion over the next few years in a bid to develop its export plan and as well as to boost its market share in South Africa. Volkswagen plans to spend R2,2-billion through to 2007, which includes R750-million for production in South Africa (for the export market) of the new Golf 5. Nissan and Fiat have also announced investments of R300-million and R200-million respectively for exports to foreign markets. DaimlerChrysler is also expected to make an announcement shortly regarding its next investment plans.

Dippenaar says it is not only investment in vehicle manufacturing which is growing. “There is growing investment in the component sector, with major investments being invested in the manufacture of catalytic converters in recent years”.

Recently Bridgestone, the world largest manufacturer of tyres and other rubber products, has announced an investment of R700-million (over the next five years) to upgrade and expand its plant in Brits, in the North West province. "This investment signals Bridgestone’s confidence that the South African plant is able to produce tyres to first world standards at an acceptable price. The new technology ‘run-flat’ tyres are to be produced at the plant, one of only three plants in the world with this capability,” says Dippenaar.

Concept Cars at Johannesburg Motor Show

Auto Africa 2004, to be held at Nasrec south of Johannesburg between 25 and 31 October, is the continent’s premier motoring show and is held every two years. At its core, Auto Africa is a truly comprehensive automotive trade exhibition, drawing participants in increasing numbers to exhibit. In 2004, exhibitors will be spread across the following clusters:
New passenger and leisure vehicles, which form the core of the event in dedicated exhibition halls.
They are supported by truck and bus displays, which are located in separate halls.

Allied Industries are accommodated in the equipment halls and include:

  • Manufacturing, robotics, raw materials and technology;
  • Components, wheels and tyres, fuels and lubricants;
  • Parts and accessories;
  • Garage equipment and workshop furnishings;
  • Collision repair suppliers and technology;
  • Information technology and software solutions;
  • Trucking manufacturers, components suppliers and service products;
  • Specialized services to the automotive industry.

Outdoor exhibits, SUV exhibits and motorcycles as well as demonstration and activity centres are located outside the halls, within the Nasrec perimeter.

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