Though South Africa isn’t considered a lucrative new vehicle market, the government is trying to persuade the US Big Three car makers into setting up in the country, WardsAuto.com reported, adding that representatives from GM, Ford and Chrysler recently met with South African trade and investment officials to discuss the idea.
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WardsAuto.com said that, until now, US car makers have shown little interest in setting up global plants in South Africa primarily because the country and its neighbours lack strong car sales –despite a population of 40 million, South Africa only has about 10 million cars on the road.
According to WardsAuto.com, citing the National Association of Automobile Manufacturers of South Africa, April new car sales slipped to 25,440 from March’s 30,277 due to high borrowing costs.
WardsAuto.com said that, though the country cannot obviously compete with China and Brazil, South Africa’s government believes investment in such a lucrative sector would provide jobs and thereby boost the standard of living so more people could afford to own cars.
WardsAuto.com noted that some international manufacturers – including Chrysler group parent DaimlerChrysler AG – are already doing well in South Africa. Of the 500,000 vehicles built there annually, about 300,000 are for local sale and the rest are exported.
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These include the world supply of right hand drive Mercedes-Benz C-class, the BMW 3-series (in both LHD and RHD and including cars for the US), Volkswagen’s Golf (mostly to the UK) and Toyota Corolla hatchbacks for Australia (Camrys make the return journey from Toyota’s plant in Melbourne).
Ford, which withdrew from direct involvement in making and selling its cars in South Africa in the 1980s, during the apartheid era, has an indirect presence through subsidiary holdings, WardsAuto.com said, adding that General Motors’ Delta Motor Corporation exports car parts from Port Elizabeth.
WardsAuto.com said talks for a free-trade agreement with the US are in progress and there already is a policy for duty-free exports into the US from qualifying sub-Saharan African countries that includes South Africa. The automotive parts and components industry has been the fastest-growing export to benefit from this, accounting for 6%-7% of the gross domestic product, the report added.
South African-built BMWs were rated better made than those from Europe or the US in a recent Stateside survey by JD Power and Associates, WardsAuto.com noted.
Should one or all of the US Big Three eventually establish South African car production, as WardsAuto.com suggests is under consideration, the wheel will have turned full circle in many respects.
In the 1960s and 1970s, also during the apartheid era, Australian-made General Motors Holdens were lightly restyled, locally assembled and sold as the Chevrolet Kommando and Constantia, competing with Chrysler Australia’s Valiants. Around this time, Chrysler took over the UK’s Rootes Group and Chrysler UK products such as the Hillman Hunter were also sold in South Africa, assembled locally using Peugeot engines to meet strict local content rules. After the Holden-based Chevrolets were phased out, GM South Africa subsequently built and sold Opel-designed cars.
Ford, too, had a thriving SA operation assembling and selling a mix of British and German Ford models and, just-auto understands, Ford Australia’s Falcon line, a competitor for the GM Chevrolet and Chrysler Valiant models. Along with other international car companies, as international opposition to South Africa’s apartheid policies grew in the early 1980s, Ford subsequently pulled out its investment and a new company called South African Motor Corporation (Samcor) took over Ford (and Mazda) assembly and distribution. After the apartheid regime ended, Ford formed two South African subsidiary companies. Its press website shows these are engine and car-making operations.
GM’s website said it bought 49% equity in Delta Motor Corporation (Pty) Ltd. in December 1997 and that management responsibility rests with the South African management team. Delta was formed through a management buy-out in 1986 when General Motors South African withdrew from South Africa.
Just-auto members can read an overview of the South African motor industry here: https://www.just-auto.com/features_detail.asp?art=504.
