Made In Africa: South African Auto Industry Strong Thanks To Financial Stability

Made In Africa: South African Auto Industry Strong Thanks To Financial Stability

Despite a slight dip in vehicle sales domestically this summer, South Africa is enjoying healthy exports and cars built under licence of foreign brands are a major source of income for the country, according to a report in TalkBusinesssMagazine.

Many multinational auto makers have chosen South Africa as a location for auto production and assembly for both local and international markets, and as a source of vehicle components.

BMW, Ford (incorporating Mazda), General Motors, Toyota, Volkswagen, Mercedes Benz, Nissan and Renault have production plants in South Africa. Component manufacturers such as Arvin Exhaust, Bloxwitch, Corning, Senior Flexonics have established production bases here, according to SouthAfrica.info.

The sectors accounts for almost 12 percent of South Africa’s manufacturing exports, SAinfo. reports.

Automotive firms are mainly based in the Eastern Cape and Gauteng to take advantage of lower production costs and growing access to new trade markets such as other African countries, which are increasingly purchasing car components made in South Africa. More than half a million vehicles of all kinds – domestic and international – are now manufactured in the country every year. That’s a lot of cars.

South Africa has managed to hold on to financial stability far better than many other countries in recent years, largely because of its prudent monetary and fiscal policies.

Politically stable, with a stable banking system and plenty of natural resources, it is ranked by the World Bank as an upper middle-income country.

More than 28,000 people are directly employed in auto manufacturing in the country, with 65,000 more on the components side, according to figures from 2010. Around 200,000 work in retail and after-sales positions. It is estimated that the auto industry makes up around 7 percent of South Africa’s economic output.

While the automotive industry globally has been affected by economic downturns, it is beginning to enjoy a return to its former strength and South Africa’s investment shows confidence in its own automotive capabilities, both as a manufacturer and a retailer.

South Africa sees automotive as a key growth sector and is investing heavily to stimulate it further. For example, the national Automotive Production and Development Programme was implemented in 2013 to boost local vehicle production to 1.2 million vehicles per year by 2020.