Of late a growing number of multi brand assemblers

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thousand vehicles per annum]. Of late, a growing number of multi-brand assemblers are coming up in Eastern Cape Province. It is also noteworthy that contract manufacturing is common in the industry even between established players who are otherwise competing for market share. Fiat, for example, assembles vehicles for Nissan, which assembles vehicles for Renault. The major factor for consideration is the availability of surplus capacity. On the other hand, it is possible for a company to set up its own manufacturing facility in South Africa once it has reached annual sales of 6,000 units in which a single brand in its portfolio sells approximately1,500 units annually. It places you firmly on the path of both localization of content and scaling up, which are major issues in auto manufacturing globally. A volume of that order also helps build brand equity in the local market. 1 Dieter Becker et al, Global Automotive Executive Survey 2011: Creating a Future Roadmap for the Automotive Industry,” pp. 24–26, - 2011.pdf, accessed August 25, 2011. Authorized for use only by Nayla Hamid in Global Supply Chain Management at Western University from Jan 08, 2018 to Apr 10, 2018. Use outside these parameters is a copyright violation.
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Page 3 9B11M106 SOUTH AFRICAN AUTOMOTIVE INDUSTRY South Africa fared better than its neighbors (both in and out of African continent) in the business environment rankings from 2006 to 2010. The country was expected to retain the lead for the period 2010 to 2015 in several of the 55 parameters used as the basis for rankings (see Exhibit 1). The South African automotive industry accounted for about 10 per cent of the country’s manufacturing exports. Although its annual vehicle production was less than one per cent of global vehicle production, the industry contributed about 7.5 per cent to the gross domestic product (GDP) of South Africa. The industry was picking up momentum after three consecutive years of negative growth, which had been preceded by three consecutive years of record-breaking growth. According to the National Association of Automobile Manufacturers of South Africa (NAAMSA), new vehicle sales fell by 5.1 per cent in 2007, 21.1 per cent in 2008 and 25.9 per cent in 2009. The decline was largely due to the global recession, which had reduced the flow of credit in the financial system. Locally, the South African government had passed the National Credit Act 2 in July 2007, which regulated the flow of credit and further limited its availability. In 2010, however, a turnaround began. The industry had grown at 24 per cent over the previous year, exceeding initial projections of a 7 per cent increase. The momentum was expected to be sustainable. The government had targeted a production of 1.2 million vehicles in 2020 from about 0.5 million in 2010 (see Exhibit 2).
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