portfolio committee on trade & industry dc powels naamsa president 7 november 2012
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IPAP 2012/19. Portfolio Committee on Trade & Industry DC Powels NAAMSA President 7 November 2012. IPAP 2012/19. Overview. The Global Environment SA Auto Industry in the Global Context Key trends of the SA Auto Industry Challenges facing the Auto Industry - PowerPoint PPT PresentationTRANSCRIPT
Portfolio Committee on Trade & Industry
DC PowelsNAAMSA President7 November 2012
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IPAP 2012/19
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1. The Global Environment
2. SA Auto Industry in the Global Context
3. Key trends of the SA Auto Industry
4. Challenges facing the Auto Industry
5. Automotive Production Development Program (APDP)
6. Roadmap to 2020
7. Conclusion
Overview
IPAP 2012/19
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1. The Global Environment
2. SA Auto Industry in the Global Context
3. Key trends of the SA Auto Industry
4. Challenges facing the Auto Industry
5. Automotive Production Development Program (APDP)
6. Roadmap to 2020
7. Conclusion
Overview
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North America Central and Eastern Europe
Rest of the World
Asia Pacific
Western Europe
South America
9,4%
7,8%
-7,6%
13,6%4,8%
World Passenger Market Growth/Decline - YTD Sep 2012 vs 2011
WORLD: Market: +7,9%
13,5%
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A strong growing trendAuto production - 1945 to 2011 (Million units)
The Global Environment
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Structure in %
Rest of World
Japan
WesternEurope
NorthAmerica
million
vehicles29.539 39.145 48.468 57.814 77.612 80.274
Structure of Car / CV Production by Region1970 - 2011
Source: VDA, IHS Global Insight, own calculations
The Global Environment
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million units
Rank2011(2010)
CVCars
Anmerkung: teilweise geschätzt
1. (1.)
2. (3.)
3. (2.)
4. (4.)
5. (5.)
6. (6.)
7. (7.)
8. (9.)
9. (8.)
10. (10.)
11. (11.)
12. (13.)
13. (14.)
14. (12.)
15. (16.)
16. (15.)
17. (20.)
18. (19.)
0.8%11.7%
-12.8%6.9%9.0%
10.7%0.7%
14.4%-1.4%2.9%3.2%
41.5%5.3%
-11.4%11.5%
8.6%19.3%15.7%
Ranking of Most Important Production Countries January - December 2011
Source: VDA, Polk Germany, press information
Change vs. previous year
The Global Environment
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1. The Global Environment
2. SA Auto Industry in the Global Context
3. Key trends of the SA Auto Industry
4. Challenges facing the Auto Industry
5. Automotive Production Development Program (APDP)
6. Roadmap to 2020
7. Conclusion
Overview
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Year 2008 2009 2010
Global vehicle Production
70.52 Mio 61.7 Mio 77.9 Mio
SA vehicle Production
0.563 Mio 0.374 Mio 0.472 Mio
SA share of Global
Production0.8% 0.61% 0.61%
SA Auto Production vs Global Production
2011
80.1 Mio
0.533 Mio
0.66%
SA Auto Industry in the Global Context
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Auto exports as % of total exports
YearYear 19951995 20072007 20082008 20092009 20102010
Total SA ExportsTotal SA Exports(R Billion)(R Billion) 102.1102.1 494.4494.4 656.0656.0 515.4515.4 584584
Total Automotive Total Automotive ExportsExports(R Billion)(R Billion)
4.24.2 67.667.6 94.294.2 61.061.0 69.569.5
Automotive exports Automotive exports as a % of total SA as a % of total SA exportsexports
4.1%4.1% 13.7%13.7% 14.4%14.4% 11.8%11.8% 11.9%11.9%
20112011
694.2694.2
82.282.2
11.8%11.8%
SA Auto Industry in the Global Context
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1. The Global Environment
2. SA Auto Industry in the Global Context
3. Key trends of the SA Auto Industry
4. Challenges facing the Auto Industry
5. Automotive Production Development Program (APDP)
6. Roadmap to 2020
7. Conclusion
Overview
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15 764
68 031
284 211
174 947
239 465
272 457 281 000
361 300
1995 2000 2008 2009 2010 2011 2012 FC 2013 FC
-38% 14%37% 3%
Un
its
29%
Start of MIDP
SA Automotive IndustryDevelopment of FBU export volume - units
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3.3
12.6
44.1
27.930.8
38.8 40.0
45.0
1995 2000 2008 2009 2010 2011 2012 FC 2013 FC
R B
io
-37% 3%10% 26% 13%
Start of MIDP
SA Automotive IndustryDevelopment of Component Exports - R Bio
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0
5
10
15
20
1995-1999
2000-2004
2005-2009
2010-2011
2012 FC 2013 FC
Support Infrastructure (I.T,R&D, Technical, etc.)
Land and Buildings
Product / Local Content / ExportInvestment / ProductionFacilities
R B
io
Total (1995 – 2013 FC) = R52.2 Bio
R4.5 Bio
R10.7 Bio
R18.7 Bio
R7.9 Bio
R5.0 Bio R5.4 Bio
SA Automakers (7 Car and 2 Truck Producers)New Investments
R5.0 Bio R5.4 Bio
Start of MIDP
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100 000
200 000
300 000
400 000
500 000
600 000
700 000
800 000
1995 2006 2007 2008 2009 2010 2011 2012 FC 2013 FC
LCV Passenger
8%- 45% 61%76%
Un
its
Development of SA Pass. & LCV Market 1995 - 2013 FC
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8% 16% 11% 10%
Un
its
Passenger Car Market Development - 2012 vs. 2011
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Passenger Car Growth by Channel YTD Oct – 2012 vs. 2011
15% 6%-4%-1%
Uni
tsIPAP 2012/19
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100 000
200 000
300 000
400 000
500 000
600 000
700 000
1995 2008 2009 2010 2011 2012 FC 2013 FCLCV Passenger
40% - 33% 48% 18%
Un
its
Development of Auto Production in SA - 1995 to 2012
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Year Global Production (Mio units)
SA Production (Mio units)
SA Exports (Mio units)
SA Component Exports (R Bio)
2000 57.8 0.357 0.068 12.6
2011 80.1 0.533 0.273 38.8
% Growth2011 vs 2000
39 49 302 208
2012 FC 83 0.555 0.281 40
% Growth2012 FC vs 2011
4 4 3 3
Growth in Auto Industry - SA vs Global
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1. The Global Environment
2. SA Auto Industry in the Global Context
3. Key trends of the SA Auto Industry
4. Challenges facing the Auto Industry
5. Automotive Production Development Program (APDP)
6. Roadmap to 2020
7. Conclusion
Overview
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Supplier Cost Competitiveness
Brazil104
W. Europe100
Mexico89
Russia107
Malaysia94
E. Europe93
Cz. Rep95
India85
China91
Thailand92
RSA>110
EUR 1 : ZAR 10.50
South Korea88
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Is this a real threat? – Hyundai/Kia as an example
5.0%
10.4%
17.0%
2003 2008 YTD Oct 2012
Hyundai/Kia produce in South Korea (cost index 88) and India (cost index 85), ship cars to SA, pay 25% import duty and are still highly competitive in SA
Pas
seng
er M
arke
t S
hare
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Cum Inflation cost increases: Auto Wages – 1993 to 2012
[%]
1992 – Index 100
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Exchange rate effect on Revenue
2010 2011 2012 FC
2008 20090
100 97
80 8389
9.71 9.99 10.712.07 11.69
Exchange Rate ZAR/ Euro
[%]Project approval in 2008 – Index 100
-11%
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Estimated avg Auto sector costs Inflation impacts (2008 – 2012)
Material
Other Overheads
Indirect LabourDirect Labour
Electricity
2010 2011 20122008 20090
[%]2008 – Index 100
218
140130123
93
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Combined effect of Exchange Rate + Cost Inflation
+
Dramatic deterioration of export competitiveness! =
Est. avg. Auto sector costs Inflation impacts
[%]Project approval in 2008 – Index 100
Exchange rate effect on Revenue
[%]Project approval in 2008 – Index 100
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Exporting to Sub-Saharan Africa
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1. The Global Environment
2. SA Auto Industry in the Global Context
3. Key trends of the SA Auto Industry
4. Challenges facing the Auto Industry
5. Automotive Production Development Program (APDP)
6. Roadmap to 2020
7. Conclusion
Overview
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Production:Local Market
Production:Local MarketExport Market
APDPMIDP
Production:Local Market
Production:Local MarketExport Market
Production Incentive (PI)
APDP
Standard materials 25% deemed value added on local materialsPGM’sLeatherAluminiumSteelStainless SteelBrassRaw automotive glass
Vulnerable products40% deemed value added on standard materials (reducing to 25% by 2017)Alloy wheelsAluminium productsCast iron components Catalytic convertersFlexible couplingsLeather interiorsMachined brass comp. Steel jacks
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APDP
MIDP
APDP
Standard materials 25% deemed value added on local materialsPGM’sLeatherAluminiumSteelStainless SteelBrassRaw automotive glass
Production:Local Market
Duty Free Allowance (DFA)Vehicle Assembly Allowance (VAA)
Production:Local MarketExport Market
Vulnerable products40% deemed value added on standard materials (reducing to 25% by 2017)Alloy wheelsAluminium productsCast iron components Catalytic convertersFlexible couplingsLeather interiorsMachined brass comp. Steel jacks
Production Incentive (PI)
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APDP - Automotive Production Development ProgrammeDuty Rebate Mechanism Cash Grant
Import Duty Vehicle Assembly Allowance (VAA)
Production Incentive (PI)
Automotive Incentive Scheme (AIS)
Effective July 2009
Taxable cash grant of up to 30% on Qualifying Investment
OEM must achieve 50.000 units/ p. a. (within 3 years)
Payable over 3 years
Light motor vehicle manufacturers- Investment: > 30 Mio. ZAR
Component manufacturers- Investment: > 1 Mio. ZAR
Stable import tariffs from 2012
Preferential duty rate on FBU imports from EU
If Production > 50.000 units/ p. a.
20% Allowance based on net turnover value
Reduces to 18% over 3 years
Duty credit based on production value added (Sales minus Imported components/materials minus non qualifying local raw materials)
Additional benefit available for the export of vulnerable components
PI factor will be 80% for 2013/2014 reducing by 5% pa to 50% by 2020
1995 - 2012 MIDP 2013 - 2020 APDPExport orientated program Production orientated program
APDPMIDP APDPMIDP APDP
Standard materials 25% deemed value added on local materialsPGM’sLeatherAluminiumSteelStainless SteelBrassRaw automotive glass
Production:Local Market
FBUFBU (EU pref. Rate)
CKD
Duty Free Allowance (DFA)Vehicle Assembly Allowance (VAA)
Production:Local MarketExport Market
Vulnerable products40% deemed value added on standard materials (reducing to 25% by 2017)Alloy wheelsAluminium productsCast iron components Catalytic convertersFlexible couplingsLeather interiorsMachined brass comp. Steel jacks
Production Incentive (PI)
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1. The Global Environment
2. SA Auto Industry in the Global Context
3. Key trends of the SA Auto Industry
4. Challenges facing the Auto Industry
5. Automotive Production Development Program (APDP)
6. Roadmap to 2020
7. Conclusion
Overview
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Legend:
Domestic Market only
2005 2013 2020 And Beyond
350,000
600,000
1,200,000
Loca
l pro
ducti
on v
olum
e pe
r ann
um
Domestic supply with some global and regional exports
Enhanced International Competitiveness
MIDP
Tooling Initiative
Beneficiation Strategy
Local market growth
Local Content /Global Suppliers
Vulnerable Sectors
Light Vehicles MCV / HCV
Investment Support
IDC
AIS
Local contentDevelopment
Existing tradeAgreements AGOA SADCEU
InfrastructureDevelopment
Ports and Rail
Electricity
Tariffs
New tradeagreements
Mercusor
Africa(SSA)
BRIC
OtherIPAP 2
Fuel quality
APDP
PreferentialProcurement
Labour
Industrial stability
Skills / training
Productivity
APDP
Wage Inflation Electric vehicles
1995
Roadmap towards 1.2 mil units/annum and achieving international competitivenessStatus - as shown 12 months ago
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Legend:
Domestic Market only
2005 2013 2020 And Beyond
350,000
600,000
1,200,000
Loca
l pro
ducti
on v
olum
e pe
r ann
um
Domestic supply with some global and regional exports
Enhanced International Competitiveness
MIDP
Tooling Initiative
Beneficiation Strategy
Local market growth
Local Content /Global Suppiers
Vulnerable Sectors
Light Vehicles MCV / HCV
Investment Support
IDC
AIS
Local contentDevelopment
Existing tradeAgreements AGOA SADCEU
InfrastructureDevelopment
Ports and Rail
Electricity
Tariffs
New tradeagreements
MercusorAfrica(SSA)
BRIC
Reasonableprogress
Substantialprogress
Fuel qualityAPDP
PreferentialProcurement
Labour
Industrialstability
Skills / training
Productivity
APDP
Wage Inflation Electric vehicles
1995
Limitedprogress
Progress during past 12 months
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1. The Global Environment
2. SA Auto Industry in the Global Context
3. Key trends of the SA Auto Industry
4. Challenges facing the Auto Industry
5. Automotive Production Development Program (APDP)
6. Roadmap to 2020
7. Conclusion
Overview
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Conclusion
South African Vehicle Assemblers and Automotive Component Suppliers are committed to the long term sustainability of the Automotive industry and look forward to partnering with key Stakeholders to grow the industry and create jobs whilst achieving international competiveness
The ability to realise the 2020 vision and production target is dependant on active engagement between the following 6 key stakeholders
• NAAMSA• NAACAM• Government (Central and Provincial)• Labour / NUMSA• Transnet• IDC
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Thank You
39
IPAP 2012/19