South Africa - Country Commercial Guide
Automotive

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-10-01

Overview


 

2018
 

2019

(estimated)

2020

(projected)

2021

(projected)

Total Market Size

37.51

35.57

34.21

35.15

 

Total Exports

13.41

14.26

14.24

14.29

Total Imports

16.43

16.52

16.48

16.57

Imports from the U.S.

1.11

0.937

 

0.920

 

0.952

 

Exchange Rate: 1 $

14.14

14.58

 

 

Unit: $billion

Data Source: Above figures are unofficial estimates obtained from industry sources.

Total automotive exports and imports (includes vehicles, OE components and aftermarket parts)

The automotive industry’s contribution to South Africa’s GDP in 2019 stood at 6.4% (4.0% manufacturing and 2.4% retail).  As the largest manufacturing sector in the country’s economy, as much as 27.6% of value-add within the domestic manufacturing output was derived from vehicle and automotive component manufacturing activity, positioning the industry and its broader value chain as a key player within South Africa’s industrialization landscape.  South Africa’s global vehicle production ranking is 22nd with a 6.9% vehicle production market share.

The automotive industry therefore represents an increasingly important strategic and catalytic role in the overall South African economy by impacting directly on many important economic policy goals, such as contribution to GDP, employment, skills development, economic linkages, technology and innovation.

The South African automotive industry incorporates the manufacture, distribution, servicing, and maintenance of motor vehicles and components. Original equipment manufacturers (OEMs), official dealers, and repair specialists work closely together to provide maintenance and repair services.  They cooperate to ensure warranty service, driver safety, environmental protection, spare parts availability, and information about technical improvements.  

Automotive Policy

The Automotive Production Development Program (APDP) replaced the export-oriented Motor Industry Development Program in 2013 with the aim of stimulating local production of automotive components while maintaining the incentives for OEMs to manufacture passenger cars and light commercial vehicles in the country for export and the local market.  One of the attractions of South Africa’s automotive policy over the past two decades has been its long-term vision and consistency.  The APDP has reinforced policy certainty, which is critical for the industry to make long-term investment decisions.  The APDP’s focus is on raising local value addition to enhance the automotive industry’s manufacturing output and export competitiveness.  The automotive sector relies heavily on the additional economies of scale provided by exports and competitiveness is critical to its success.

Under the APDP between 2013 and 2019, the nominal automotive export value grew by 96.4%, while the rate of the nominal import value was much slower, with an increase of 37.8%. The record automotive export value of $14.26 billion in 2019 reflected a substantial increase of 11.36%, compared to the $12.64 billion total export value in 2018. Record vehicle exports of 387 125 units in 2019 resulted in the vehicle export revenue increasing by $1.45 billion, or 13.86%, to $10.46 billion compared to the $9.01 billion in 2018, while automotive component exports reflected an increase of  4,7%, from 2018 to 2019. The automotive import value also increased by $890 million or 7.8%, from $11.47 billion in 2018 to $12.38 billion in 2019, mainly due to an increase in original equipment component imports to accommodate higher vehicle production volumes.

Market Trends

Vehicle and automotive component export growth in 2020 will remain a function of the direction and performance of global markets, while imports of new vehicles into South Africa are linked to the strength of the economy and movements in the Rand exchange rate. Low economic growth prospects will continue to dampen the imports of vehicles but OEM component imports are set to grow in line with higher vehicle production levels to support higher anticipated vehicle exports. Aftermarket parts and component imports will also grow in line with the growing vehicle park in the country. Considering the continued upward momentum in exports, subject to the global impact of Covid-19, along with a weak domestic market, it is anticipated that the automotive industry will show a net positive trade balance in 2020.

South Africa’s main automotive country trading partners (exports and imports combined) for 2019, reflected South Africa’s global linkages with the Original Equipment Manufacturers (OEMs) parent companies in Germany, the U.S. and Japan. The domestic automotive industry’s biggest single trading country partner in 2019 was Germany.  Total automotive trade between the two countries amounted to $9.53 billion.

The automotive sector has been one of the most visible sectors receiving foreign investments, with the seven OEMs investing $500 million in 2019, while also making investment commitments of $2.83 billion over the next five years. Concurrently, the component sector invested $248 million in 2019, whilst expecting to invest a further $1.42 billion in domestically sourced components over the next five years. Investment into South Africa at this scale is significant and will promote local value addition while importantly, technology is also embodied in the investment.

Top 10 countries (in order of import value) of origin for vehicles and automotive component imports into South Africa include: Germany, Thailand, Japan, China, India, USA, Spain, Czech Republic, UK and Spain

South African automotive exports to the U.S. increased by 157.6% from 2001 (when AGOA commenced) to 2019, while automotive imports from the U.S. increased by 458.2%, proportionally more than South African exports over the same period. Several top U.S automotive component suppliers are represented in South Africa, including Johnson Controls, Lear, TRW Automotive, Tenneco, Federal Mogul, Delphi, Visteon, and ArvinMeritor, amongst others.  All these companies have built strong business links between their South African operations and other international stakeholders.  These established business links enhance the potential for mutually beneficial trade between the United States of America and South Africa.

Aftermarket

The independent aftermarket is responsible for the manufacture and sale of automotive replacement parts and accessories through independent retailers and repair shops directly to the consumer, rather than to the OEMs themselves. The aftermarket also re-manufactures, distributes, retails and installs motor vehicle parts and products, other than the original equipment components. The import value of replacement parts increased from the $4.30 billion in 2018 to $4.46 billion in 2019.

Specialty Equipment and Accessories

There has been a rapid growth in demand for automotive aftermarket specialty equipment and accessories in South Africa. In the last nine years accessorizing and improving performance of vehicles has transformed from a hobby to a fully-fledged culture of fierce competition.  In the race to individualize and distinguish their vehicles from others, enthusiasts constantly seek innovative, authentic specialty components and accessories with little regard to price.  In this lucrative segment, South Africans are highly receptive to U.S. brands and often follow trends set in the United States. A constant need to distinguish and individualize vehicles creates opportunities for U.S. suppliers of automotive interior and exterior accessory products such as body styling kits; racing seats; alloy wheels; suspension-lowering kits; graphics; steering wheels; gear and hand-brake pouches; boot spoilers and wings; aluminum pedals; and xenon light kits.

Opportunities

South African specialty equipment and accessory wholesalers and retailers constantly seek to expand their product range and welcome opportunities to establish distributor/agent agreements with U.S. firms.  Most of the performance products are imported directly from the United States, United Kingdom, Italy, and Germany. However, these imports may not necessarily be purchased from the manufacturer or with any exclusivity and/or distributor agreements. This scenario leads to “rogue distributors” and fierce competition amongst wholesalers and smaller retail-customizing and performance shops. South African companies are interested in acquiring U.S. distributorships, but often cannot accept the U.S. company’s minimum requirement to ship. This leaves the South African importers without much choice but to engage U.S. agents who consolidate and ship U.S. automotive specialty products that are purchased from “third parties.” 

South African aftermarket importers and wholesalers often attend international exhibitions such as SEMA, AAPEX, Performance Racing Industry (PRI), and Automechanika to meet and partner with foreign companies not represented locally.

Exhibitions

Automechanika Johannesburg

Venue: Johannesburg Expo Center - NASREC

14-17 September 2021

www.automechanika.co.za

 

Futuroad Expo (Africa’s International Commercial Vehicle Show)

Venue: Johannesburg Expo Center - NASREC

14-17 September 2021

www.futuroad.co.za

 

NAACAM SHOW 2021 (Africa’s Automotive Component Initiative)

Date and Venue to be confirmed

https://naacamshow.co.za/

 

Web Resources

National Association of Automobile Manufacturers of South Africa

Website: www.naamsa.co.za

 

National Association of Automotive Component 
 and Allied Manufacturers (South Africa)

Website: www.naacam.co.za

For More Information, the U.S. Commercial Service, South Africa can be contacted via e-mail at: Jaisvir.Sewpaul@trade.gov; Phone: +27 21 702 7379; Fax: +27 21 702 7402, or visit our Website at www.export.gov/southafrica