Investment bonanza for South Africa

Investment programmes by six of South Africa’s vehicle manufacturers totalling more than R13 billion have been announced in the last two years. This follows the government’s announcement of the new Automotive Production Development Programme (APDP) that will replace the current Motor Industry Development Programme (MIDP) in 2012.

The most recent programme was the announcement of a R2 billion investment by Mercedes-Benz for the new C-Class, due for launch in 2014, with the potential to create 1 500 to 2 000 new jobs. East London will be one of four plants in the world where the new car will be built.

This follows earlier announcements by General Motors (R1 billion for production of the new Chevrolet Spark), Ford (R3 billion split between its engine plant in Port Elizabeth for the new Puma diesel engines and Silverton for the new Ford Ranger and Mazda BT-50 bakkies), Volkswagen (R4 billion for the new Polo and Polo Vivo), BMW (R2,2 billion for the new 3-Series) and Renault/Nissan (R1 billion for production of the Renault Sandero and Nissan NP200).

Hyundai chases parts market

Hyundai Automotive SA had a 45 per cent share of its own replacement parts market in 2005 and has used a strategy to match the pricing of “grey” alternative parts suppliers in order to promote the use of genuine parts. This has boosted its share of its own market to a claimed 73 per cent.

VW targets 80 per cent local content

Volkswagen SA will achieve 72 per cent local content on the Polo Vivo and new Polo this year and is already working to increase this to 80 per cent, but no date has yet been set to meet this objective.

Taxi industry flexes its muscle

The taxi industry plans to leverage the R22 billion it spends annually on vehicles, tyres, servicing, fuel, lubricants and insurance to obtain discounts and other benefits from suppliers and service providers. Methods being considered include stopping the purchase of certain brands of vehicle or product to get the manufacturers and suppliers “knocking on our door.”

Government talks to Toyota about minibus production

The government is negotiating with Toyota SA to resume assembly of minibuses in SA. The company previously held about 80 per cent of this market with hits Hi-Ace/Siyaya models, but production ceased in 2007 with a switch to high-volume production of Hilux, Fortuner and Corolla. At present none of the minibus taxis sold in SA are assembled locally.

DTI incentive scheme

The Department of Trade and Industry has already received 10 applications for its R2,7 billion Automotive Investment Scheme (AIS), which forms part of the Automotive Production and Development Programme (APDP) which will replace the Motor Industry Development Programme (MIDP) in 2012. The AIS will provide firms with a taxable cash grant of 20 per cent of the value of the qualifying investments in productive assets.

VW spending on huge scale

The Volkswagen Group will invest about US$71 billion in its automotive division in the next five years as it aims to pass Toyota as the top global motor manufacturer in sales and profitability by 2018. VW evidently increased the size of its cash pile in 2010 as sales soared to a record 7,1 million vehicles. It could use this huge “war chest” to achieve its target of selling 10 million vehicles in a year even earlier than its stated goal of 2018.

Mazda sell-off will not affect Ford SA

The sale by Ford of 7,5 per cent of its remaining 11 per cent stake in Mazda in November will not affect the Ford-Mazda relationship that has existed for decades in South Africa according to Ford SA. Ford at one point owned 3,4 per cent of Mazda. In South Africa, Ford and Mazda is involved in joint manufacturing and a linked dealer network.

Scania does deal with Porsche

Premium Swedish truck maker Scania has signed a development agreement with Porsche for the joint development of its next generation of truck cabs.

Petroleum companies seek help

South Africa’s four crude oil refineries need assistance of up to US$4 billion for a cleaner fuels upgrade (Euro IV and Euro V compliant) required by the motor industry for its new generation, low-emission and fuel efficient engines. However, Shell, BP and Engen want a cost recovery deal before investing.

“We need a cost-recovery mechanism and for government to introduce incentives such as lowering fuel tax or increasing the cost of fuels at service stations and passing that on to the oil companies,” said the executive director of the SA Petroleum Industry Association, Avhapfani Tshifularo.

Market leader Engen, with about 26 per cent of SA’s fuel sales, says it will cost about R10 billion to upgrade the country’s second largest refinery in Durban – the 125 000 barrels-a-day Enref plant. Africa’s biggest economy is also a net importer of refined petrol and diesel fuel, with future demand rising rapidly from the estimated 3 billion litres imported currently.

Nissan’s electric Leaf could come to South Africa

The Nissan Leaf electric vehicle could possibly come to SA in 2010, but it would require government incentives to make it affordable. This could be difficult as Toyota SA gets no assistance with sales of its low-emission Prius that has been sold locally for several years.

Landmark achievement for Ford plant

Ford SA’s Struandale engine plant in Port Elizabeth attained a landmark achievement when it was ahead of schedule with the production of its first batch of validation-build Puma Global engines that are destined for export. New and refurbished facilities are being used to build this latest version of Ford’s Duratorq diesel engines, known internally as the Puma. Job 1 of the production run is scheduled for the second quarter of 2011.

Hyundai also has strikes

Korean vehicle manufacturer Hyundai, which is increasing global sales at a rapid rate, is also battling with striking workers. Temporary workers demanding permanent employment closed the Ulsan plant for several weeks costing US$238 million and the production of almost 24 000 passenger cars.

SA ignition system aims for world markets

A South African company believes that it is close to selling its locally-developed ignition systems to either a vehicle manufacturer or large component manufacturer. Ambixtra CEO Deon Smit says that the fully-controllable, fast-switching electronic ignition system for petrol engines has already undergone extensive testing in Europe with reputable companies and it looks “credible, competitive and viable.”

The system is aimed at improving the combustion efficiency of an engine by between 10 to 15 per cent, thereby significantly reducing emissions.

2013 wage negotiations must be “more efficient”

The next round of wage negotiations for the SA motor industry must be “more robust and more efficient and have more mature processes in place,” according to NAAMSA president and MD of the Volkswagen Group in SA, David Powels. This follows the industry strikes in 2010 that lasted almost a month and severely affected production – especially units destined for export. “We can’t have a month’s disruption every three years,” said Powels.

Isuzu wants more local content

Isuzu Motors wants to see the local content of its bakkies and trucks assembled in SA by General Motors SA (GMSA) to increase to 40 pre cent for both vehicle types from the current 10 per cent on trucks and 32 per cent on bakkies. This is the opinion of Isuzu chairperson Yoshinori Ida who was on a visit to SA and sees more SA content lessening the price impact of imported parts, while also reducing logistical costs.

German parts maker comes to SA

German component manufacturer Benteler has opened a new R178 million plant in the Nelson Mandela Bay Logistics Park in Uitenhage. It will employ 250 people when it reaches full production of dashboard carrier panels, body parts, front and rear bumpers and chassis parts. Its main customer is Volkswagen at this stage, but it could extend to other vehicle manufacturers. It is the 68th plant in the group with number 69 and 70 already under construction in India and China.

Sales stall for Tata Nano

The world’s cheapest car, the Indian-made Tata Nano has not taken off as expected in its home market. This has resulted in the company now offering a four years manufacturer’s warranty. This offer will be extended to all existing owners as part of a strategy to improve the situation. The Nano was launched at US$2 500 and targeted at Indians wanting to upgrade from motorcycles.