SA automakers eye African opportunities

30 July 2019 | Web Article Number: ME201915542

SA automakers eye African opportunities

AS one Port Elizabeth based automaker completes a multi-billion-rand production expansion programme, the South African sector as a whole is turning its eyes north in a drive to create new opportunities and establish new markets to produce and trade its goods and services.

Ford Motor Company of Southern Africa (FMCSA) has just emerged from a comprehensive investment and production expansion programme aimed at meeting the demands of a growing export-driven business in South Africa.

An investment of R3 billion announced in 2017 opened up new potential for Ford’s Silverton Vehicle Assembly Plant in Pretoria and the Struandale Engine Plant in Port Elizabeth.

The Silverton plant now has installed capacity to produce up to 168 000 Rangers and Everests per year – an increase of 44 000 vehicles prior to the expansion, and a substantial 58 000 more than the original Ranger production capacity when this programme commenced in 2011.

In order to meet the rising international orders, Ford began exporting Rangers from Port Elizabeth to selected European markets in April this year – an initiative that addresses the high level of congestion at Durban’s Roll On Roll Off (RORO) Terminal which is the country’s primary import and export hub.

“The multi-port export strategy makes effective use of Transnet’s rail infrastructure to transport vehicles from our Silverton plant to the Port Elizabeth vehicle terminal, which is currently under-utilised,” Hill said. “We are shipping approximately 1 000 Rangers a month via Port Elizabeth, which improves our efficiency and delivery timeframes to Europe where the Ranger is the top-selling pickup.”

Looking north

Ford isn’t alone in its focus on the export market. Automotive manufacturing stakeholders, including SA based vehicle assemblers, financial institutions and component manufacturers represented by the National Association of Automotive Component and Allied Manufacturers (Naacam), were in Ethiopia recently seeking to create business opportunities and a foster a favourable investment environment for South African companies.

The roadshow is an initiative of the African Association of Automotive Manufacturers (AAAM), facilitated by Deloitte Africa. It is also intended to assist Ethiopia, Africa’s fastest growing economy, in shaping policy to support industry and in particular the automotive sector; gain insight into the automotive sector and potential for enhanced manufacturing in Ethiopia; and build relationships and networks between South Africa’s automotive stakeholders and key Ethiopian government and industry figures.

The three-day trip saw delegates meet Ethiopian President Sahle-Work Zewde, State Minister of Finance Eyob Tekalign Tolina, Ethiopian Investment Commissioner Abebe Abebayehu, as well as a host of private and public sector representatives.

NAACAM Executive Director Renai Moothilal said that in order to unlock markets across the continent, cross border industrial development was vital.

“Governments in partner countries such as Ethiopia need to put in place supportive policies that grow automotive manufacturing capabilities there. Dealing with policy issues around grey and used vehicle imports, standards and homologation, protection of IP, liquidity of currency exchange and financing of investment are key when looking to promote automotive manufacturing,” Moothilal said.

Thomas Schaefer, President of AAAM and Managing Director of VWSA, said the roadshow was part of AAAM’s long-term vision to establish a pan-African automotive industry collaboration with countries who have the political will to develop industries, and at this stage was likely include South Africa, Nigeria, Ghana, Kenya, Rwanda and Ethiopia.

“All South Africa’s automotive stakeholders focus on exporting to the US or Europe, but the rest of the developed world wants to export there as well, and they are well ahead of the game with high efficiency and plants closer to those markets.

“The only advantage that Africa has is low labour costs in some countries, but South Africa hasn’t even got that. So, the only way to promote growth is to connect Africa’s economies for mutual trade and everybody gets a piece of the pie.”

Schaefer said expanding into Africa would result in South Africa’s automotive players not just having a market of 57 million people, but over one billion people.

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