S.Africa’s auto sector gets over US$71 million boost - CNBC Africa

S.Africa’s auto sector gets over US$71 million boost

Southern Africa

by Trust Matsilele 0

S.Africa's Motor Industry Development Plan is credited for positive response in the auto industry. PHOTO: Getty Images

“Toyota SA would be investing approximately 33.2 million dollars in a parts distribution warehouse and a new assembly line in Durban. German auto component group, Friedrich Boysen GmbH is putting 16.4 million dollars in a new 10,000 square metre plant and Beijing Automotive Works to stake 17.9 million dollars in a plant expected to service the whole of sub-Saharan Africa,” noted the United Nations Economic Commission for Africa (ECA) report.

Other companies expected to invest in the economy are BMW, by adding a third shift at its plant and also Mercedes Benz SA which has started a workforce recruitment exercise.

“The automotive and components industry accounts for 30 per cent of South Africa’s total manufacturing output,” head of the National Association of Automotive Manufacturers of South Africa, Johan van Zyl said.

The industry, which contributes at least six per cent to the country’s gross domestic product and accounts for almost 12 per cent of its manufacturing exports, is recovering from the workers strike that hit the sector last August and September, which hurt production and vehicle exports.

(READ MORE: Industrial action contributes to CI's drop in sales)

Considered to be the biggest car producer in Africa, South Africa’s automotive industry includes Toyota, Renault, BMW, Ford, General Motors, Nissan, Mercedes Benz, MAN, DAF Trucks and Tata, among others.

According to the Department of Trade and Industry, these companies raked in 38.8 billion rand in exports in 2011.

The automobile industry’s success story is credited to the government’s 1995 policy – the Motor Industry Development Plan (MIDP), which is credited for the production figures in South Africa.

Upon inception of this policy, these figures jumped from 388,442 in 1995 to 532,545 in 2011. Exported units jumped from 15,764 in 1995 to 272,457.

“The government policy that encourages a proactive approach has helped to drive development in this sector,” read the ECA’s Dynamic Industrial Policy in Africa report.