SA revs Renault's engines
6 October 2004
SA's automotive industry is showing no signs of slowing. The country could soon feature in expansionist plans by French car manufacturer Renault. Tata Motors, Mahindra & Mahindra and Hyundai are also considering setting up local factories. And VW, General Motors and DaimlerChrysler have all announced new investments.
Renault's right-hand drive model for SA?
According to Finance24, the possibility of Renault building its right-hand drive model in SA, destined for the export market, has been on the cards for some time. Luc-Alexander Menard, Renault's vice president of international operations, told the publication that he has been in "regular" meetings with Nissan South Africa.
Under discussion is the possibility of building a new car for South Africa at its plant in Rosslyn, Pretoria. Menard said the car would be exported to right-hand drive markets, freeing up capacity at the French plants to build its standard
left-hand drive models.
The French car manufacturer only set up shop in South Africa in 1996, after apartheid sanctions were lifted. But Renault says its brand has broken rapidly through relative obscurity, and "in 2004 it is a very different story - the Renault brand has once again established itself as a leading contender at the southern tip of Africa … [making] significant inroads in the commercial sector of the market."
South Africa's automotive industry has become an increasingly important contributor to the country's gross domestic product, mainly through strong growth in the motor vehicle and component exporting sector.
The industry is ranked 19th in the world in terms of vehicle production. It is responsible for approximately 80% of Africa's vehicle output and produces 0.7% of the world's vehicles.
Programme fires up investment
Discussions around a local Renault plant have been spurred by a shift in emphasis in the
Motor Industry Development Programme (MIDP), which makes it attractive for motor companies to invest in South African production facilities.
The MIDP was introduced in 1995 and was recently extended until 2007 by the Department of Trade and Industry.
The programme has boosted exports by enabling auto manufacturers to include total export values as part of the their local content total. They are then allowed to import the same value of goods duty-free into South Africa. This has allowed them to concentrate on manufacturing vehicles or components for export, and to import others into South Africa.
New amendments to the MIDP make it possible for investors in new plants and equipment to claim a duty credit certificate of up to 20% of the value of their investment over a five-year period.
The benefits mean that Renault can see its way clear to operating profitably locally.
Renault is the majority shareholder in Nissan globally, and the company is
collaborating on chassis, engines and drive train development. Renault parts are already distributed via the comprehensive Nissan parts network based in Rosslyn.
The Renault Megane II 1.9 dCi hatchback was named South African Car of the Year for 2004.
Tata, Mahindra, Hyundai eye SA
At the same time, three major international vehicle manufacturers, Tata Motors, Mahindra & Mahindra and Hyundai are also considering setting up factories in South Africa in the next few years.
In an echo of Renault's plans, Indian car and truck manufacturer Tata Motors has been considering the move "for a while", while Hyundai has hinted that it may take advantage of the MIDP by supplying components to some of its plants in Turkey and India.
Mahindra & Mahindra says that South Africa is among four markets identified for its expansion. Others include Russia, China, Malaysia and Indonesia.
VW, General Motors,
DaimlerChrysler
Volkswagen South Africa (VWSA) also recently announced a R25-billion export programme that will see the company export about 2 300 of its new Golf 5 cars each month for the next five years.
The deal is expected to generate turnover of R320-million a month, or R4-billion annually, and about R25-billion over the lifecycle of the vehicle.
The majority of the vehicles will be exported to Japan and Australia. Additional vehicles are expected to be shipped to New Zealand, Brunei, Singapore, Sri Lanka, Hong Kong, Indonesia and Malaysia.
Meanwhile, General Motors South Africa (GMSA) recently announced that it will invest R500-million in the new locally produced Isuzu KB bakkie range - the company's biggest investment in a single product line.
Most of the money will be used to improve tooling and facilities at the company's Port Elizabeth plant, with R200-million expected to be allocated for new production facilities and increased
assembly capacity, R150-million to be spent on sheet metal tooling and R160-million on local supplier tooling and engineering specifications.
The company recently added another record to its performance history after producing the 150 000th vehicle at its hi-tech Struandale assembly plant.
DaimlerChrysler has also confirmed that the successor to the current Mercedes-Benz C-Class will be manufactured in East London - putting to bed speculation about the future of local manufacture of the vehicle.
SouthAfrica.info reporter
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