Why this is important to Wisconsin businesses: By becoming acquainted with trends in South Africa’s automotive market, Wisconsin machinery manufacturers and component manufacturers can take advantage of market opportunities.
South Africa is currently the largest vehicle market in Africa, accounting for 37% of new vehicle sales on the continent (followed closely by Egypt). South Africa’s manufacturing sector accounts for 13.2% of the country’s gross domestic product (GDP), and is a major contributor to exports and foreign currency earnings. As the largest manufacturing sector in the country’s economy, vehicle and component production accounted for 30.1% of South Africa’s manufacturing output in 2017, while the broader automotive industry’s contribution to the GDP stood at 6.9% (4.4% manufacturing and 2.5% retail).
Total automotive revenue within the scope of the automotive business sphere in South Africa amounted to over R500 billion ($34.8 billion) in 2017. Exports of automotive products in 2017 accounted for R164.9 billion ($11.5 billion), equating to 13.9% of all South African exports. Additionally, investment by the seven major original equipment manufacturers in the country in 2017 amounted to a record R8.2 billion ($571 million), along with a substantial R4.0 billion ($278 million) investment by component suppliers.
South Africa is regarded as a global tier 2 player, and forms part of the group of countries producing less than million vehicles per year. South African vehicle production increased to 601,178 vehicles in 2017, up 0.2% from the 600,008 units produced in 2016, and the National Association of Automobile Manufacturers of South Africa (NAAMSA) forecasts an increase to 850,000 in 2020. However, the country’s global vehicle production ranking remained at 22nd place in 2017, with a market share of 0.62%. In terms of global light commercial vehicle production, South Africa was ranked 15th with a market share of 1.25%, while in terms of global passenger car production, the country was ranked 26th with a market share of 0.45%. With 557,701 vehicles sold in 2017, South Africa was ranked 24th in the world in terms of global vehicle sales with a market share of 0.58%.
Foreign investment in the South African automotive industry is on the rise, with investments such as the R11 billion ($764 million) one by the Greenfield Beijing Automotive International Corporation (BAIC) in a 100,000-vehicle manufacturing plant at the Coega Development Corporation in the Eastern Cape. BAIC will take a 65% stake in the multi-billion-rand joint venture with the Industrial Development Corporation. Additionally, BMW has spent more than R6 billion ($470 million) on a plant in Rosslyn, north of Pretoria, and has started production of the X3 sports utility vehicle at the site, the first time this vehicle has been made outside the U.S.
Toyota remained the dominant company and automotive brand in South Africa in 2017, marking 38 years of total market leadership with a market share of 22.9%, followed by Volkswagen Group of SA, Ford Motor Company of Southern Africa, and Nissan South Africa. The Volkswagen Group brand retained leadership in the South African passenger car market for the seventh successive year, with the Polo Vivo and Polo the two best-selling cars. With the withdrawal of General Motors from South Africa (one of various closures around the world), its Port Elizabeth manufacturing plant and headquarters facilities were taken over by Isuzu Motors SA. Previously a joint venture between Isuzu Japan and General Motors, it is now a wholly owned Isuzu entity. Isuzu will also run the Port Elizabeth parts distribution center, and its dealers will attend to the substantial car parc of GM vehicles.
Of the top 10 best-selling vehicles in South Africa in 2017, nine were South African–built cars and light commercial vehicles. The top 10 most popular models sold in 2017 included five light commercial vehicle models (Toyota Hilux, Ford Ranger, Toyota Quantum, Nissan NP200 and Isuzu KB) and five passenger cars (Volkswagen Polo Vivo; Volkswagen Polo; Toyota Etios, which is imported from India; Toyota Fortuner; and Toyota Corolla/Corolla Quest).
In 2017, light commercial vehicles remained the most popular vehicle sold in South Africa. The Toyota Hilux was the top-selling one-ton light commercial vehicle for the 45th time in its 48 years on the domestic market, despite a battle for dominance with the Ford Ranger in this high-profile segment. This also meant that a light commercial vehicle remained the most popular vehicle sold in the South Africa market, with the Hilux selling 36,422 units and the Ford Ranger selling 32,786 units, followed by sales of 28,402 units by the top-selling passenger car, the Volkswagen Polo Vivo. The Hilux has been the overall top-selling line in South Africa for 14 of the last 18 years.
By becoming acquainted with trends in South Africa’s automotive market, Wisconsin machinery manufacturers and component manufacturers can take advantage of market opportunities.