By Karen E. Thuermer, AJOTSouth Africa’s automotive industry is a global, turbo-charged engine for the manufacturing and export of vehicles and components. The sector accounts for about 10 percent of South Africa’s exports, making it a crucial cog in the economy. South Africa currently exports vehicles to over 70 countries, mainly Japan (around 29 percent of the value of total exports), Australia (20 percent), the UK (12 percent) and the US (11 percent). African export destinations include Algeria, Zimbabwe and Nigeria. While South Africa can be regarded a minor contributor of global vehicle production, locally the sector is a giant. The government estimates it contributes about 7.5 percent to the country’s gross domestic product (GDP) and employs some 36,000 people. In fact, new vehicle sales there in recent years have made South Africa one of the best performing automobile markets in the world One reason for this may be the fact it’s very expensive to import cars into South Africa. Besides the high cost of shipping vehicles all the way to South Africa, a value-added tax of 14 percent is applied to new cars, in addition to a 36 percent customs duty tax.
Consequently, auto manufacturers such as Volkswagen, Daimler AG, BMW, Renalt-Nissan, Toyota, Ford and GM have invested in plants there. Each has benefited from South Africa’s growing market. In fact, last year the auto industry was one of South Africa’s bright spots in its economy. According to figures reported by Bloomberg News, last year car companies produced 472,049 vehicles in South Africa, up 26 percent over 2009. The government’s goal is for 1 million cars to be produced there by 2020. If achieved, this would be a boon for components manufacturers that benefit from the local and export market. The National Association of Automotive Component and Allied Manufacturers (Naacam) reports that component exports ticked up 10 percent in rand terms – and about 15 percent in volume – in the first quarter of the year, compared with the first quarter of last year. Component sales to local vehicle manufacturers were also up around 10 percent, while sales to the aftermarket declined as the trend moves from repairing old vehicles to buying new vehicles. This is good news for a country where exports, in general, are falling and manufacturers continue to shed jobs. Robert Bosch South Africa Enter Robert Bosch South Africa (RBSA), a regional branch of the Bosch Group, the world’s biggest private industrial corporations and where automotive technology is one of the biggest corporate divisions in the World Wide Bosch Group. Bosch is the world’s largest manufacturer of automotive parts and systems. In South Africa, Bosch is one of several auto components manufacturers. Others include Arvin Exhaust, Bloxwitch, Corning, and Senior Flexonics. All located to South Africa to take advantage of low production costs, coupled with access to new markets as a result of trade agreements with the European Union and the Southern African Development Community free trade area. Despite today’s economic climate where talk of another recession is on everyone’s lips, Dr. Steffan Hoffmann, managing director of Robert Bosch (Pty) Ltd in South Africa feels more positive, especially as it relates to his country’s auto industry. This AJOT reporter spoke with Dr. Hoffmann in a recent telephone interview to follow up on a visit to the Bosch plant in Brits, North West Province, South Africa late last year. The Bosch division also has operations in Midrand, in central Gauteng Province. While Dr. Hoffmann did not offer updated sales figures, last year he revealed that the Bosch division did 1.4 million Rand, or about US $190 million, in sales in 2009. He explained that Robert Bosch (Pty) Ltd manufacturers starters, alternators, electrical harnesses, drives, chassis systems, brakes, security systems, and parts for the automotive aftermarket, in addition to non-related items such as power tools, and solar /