Large investments coming to the auto sector in 2021

The Nationwide Affiliation of Vehicle Producers of South Africa (Naamsa) is anticipating one other superb yr of capital funding commitments by automotive unique tools producers (OEMs) in South Africa in 2021.

Naamsa CEO Mikel Mabasa stated on Tuesday it’s anticipating that various automotive OEMs will certainly be contemplating some capital funding initiatives in South Africa this yr, together with a Chinese language heavy business automobile producer.

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“I don’t wish to steal their thunder however there’s a main Chinese language firm, which goes to provide and manufacture heavy business automobiles within the nation this yr.

“We hope that these bulletins will likely be finalised and when they’re prepared, we are able to permit them to make these bulletins,” he stated.

Report yr

Mabasa’s feedback observe Naamsa this week releasing its quarterly overview of enterprise situations within the new automobile manufacturing business, which revealed that complete capital expenditure by the foremost automobile producers reached its highest stage on file at R9.2 billion in 2020.

“The continued excessive ranges of capital expenditure are on account of funding initiatives by producers by way of the Automotive Manufacturing and Improvement Programme [APDP], that are usually unfold over a number of years and linked to increased ranges of manufacturing for export markets,” he stated.

Mabasa stated it’s tough to invest how 2021 will pan out by way of capital investments by automotive OEMs and the way the full funding by the business this yr will examine with the file funding yr in 2020.

Nevertheless, he stated the business had began 2021 “very powerfully” from an funding perspective, notably in view of the very tough financial situations and local weather South Africa finds itself in.

This can be a reference to the announcement earlier this month that R20.13 billion is to be invested in South Africa by the Ford Motor Firm and its suppliers for the manufacturing of the brand new Ranger and a bakkie for Volkswagen at Ford’s meeting plant in Silverton in Pretoria and the adjoining Tshwane Automotive Particular Financial Zone (SEZ) and Toyota South Africa Motors (TSAM) asserting the funding of just about R3 billion in South Africa for the manufacturing of the brand new Corolla Cross sport utility automobile (SUV) at its manufacturing plant in Prospecton in Durban.


Of the R20.13 billion to be invested by Ford and its suppliers:

  • $686 million or R10.three billion gives for in depth upgrades to the meeting plant in Silverton, together with will increase within the plant’s put in capability from about 168 000 to 200 000 automobiles a yr and to drive vital enhancements in manufacturing effectivity and automobile high quality.
  • An extra $365 million or R5.5 billion funding by Ford in tooling at its main provide factories.
  • Investments of R4.33 billion by 12 automotive part suppliers, together with present and new suppliers within the nation devoted to producing parts for the brand new Ranger and Volkswagen Amarok product, in amenities and to arrange their companies adjoining to the Silverton plant.

The TSAM funding is a big milestone for the corporate as a result of will probably be the primary time its plant manufactures a hybrid drivetrain automobile.

Different funding exercise

It was additionally reported that Minister of Worldwide Relations and Cooperation Dr Naledi Pandor stated in the course of the State of the Nation Handle debate in Parliament final week that Isuzu, Tata Motors, Mahindra Motherson Sumi and Toyota have expanded their investments in South Africa.

Mabasa stated on Tuesday there are extra OEMs, aside from these talked about in Parliament, which might be positively contemplating some capital funding initiatives this yr.

“South Africa continues to be in recession at the moment and the truth that all these automakers compellingly introduced to South Africa very severe investments, is affirmation that this yr will see a renewed funding local weather from the automotive business,” he stated.

Naamsa’s quarterly enterprise overview stated annual capital funding by impartial automobile importers at their head places of work and devoted dealerships elevated to R52.four million in 2020 from R11.eight million in 2019.

The overview stated the variety of individuals employed within the automobile manufacturing business elevated by 218 jobs to 30 162 jobs within the final week of December 2020 from the 29 944 business headcount on the finish of September 2020.

Complete employment by impartial automobile importers elevated by 163 jobs to five 579 jobs at end-December 2020 from a headcount of 5 416 at end-September 2020.


Turning to the Naamsa CEO’s Confidence Index, the overview stated regardless of a a lot improved efficiency in the course of the fourth quarter of 2020, the CEOs typically regarded the prevailing home automotive business enterprise situations in the course of the fourth quarter as nonetheless unsatisfactory in comparison with the corresponding quarter of 2019.

The brand new automobile market in South Africa recorded its lowest combination gross sales complete in 18 years in 2020 due to the impression of the Covid-19 lockdown.

Nevertheless, the overview stated the sentiment expressed by the Naamsa CEOs associated to automotive enterprise situations over the subsequent six months “is certainly one of cautious optimism”.

“A rebound within the home in addition to world GDP development charges is mostly anticipated for 2021, which bodes nicely for improved home new automobile gross sales and manufacturing, from a really low-based Covid-19-affected 2020.

“Usually, the CEOs throughout all automobile manufacturing segments, in addition to the CEOs of the impartial automobile importers, are pretty optimistic that home new automobile market efficiency indicators and market situations are doubtless to enhance over the subsequent six months,” it stated.