There is no industry more present in the worldwide community than the automobile industry. Ever since the late 1800’s when Benz and Daimler invented the first ‘modern car’ the industry has grown into a billion dollar industry; with more than 400 million passenger cars on the roads today. During the early part of the twentieth century the United States was home to more than 90% of the world’s automotive industry, but has shrunk to about 20% in today’s world. This drastic change has occurred by the booming economies in such nations as Japan, Germany, Canada, France, Italy and other nations.
The results of a recent survey by Curtin University (USA) indicate that there is a fast growing trend of nanotechnology in the automotive industry that has already started and is moving rapidly. By 2010 nanotechnology will represent a significant portion of the industry and will be vitally important to everyone involved.
Locally, vehicle production is the second biggest industry in South Africa’s manufacturing sector, and one of the fastest growing. Vehicle exports have grown around nine fold since 1994, and now accounts for nearly 7% of the country’s exports.
Overall, the automotive industry – including manufacturing, distributing and servicing of vehicles and components – is the third largest sector in the economy, after mining and financial services, contributing in the region of 7% to gross domestic product.
All of the major vehicle makers are represented in South Africa, as well as eight of the world’s top ten auto component manufacturers and three out of the four largest tyre manufacturers.
South African vehicle exports are projected to rise strongly through 2006 – 2008, following a record year for South African vehicle production and sales in 2005.
Capital expenditure by the industry – investment in production and export facilities and supporting infrastructure – more than doubled between 2000 and 2005, from around R 1.5 billion to R 3.6 billion, with further massive increases projected for 2006 – 2008.
Most of this has been foreign investment, with the parent companies of local car manufacturers expanding local operations. All of the large manufacturers in the country have launched major export programmes in recent years – the latest being General Motors.
The catalyst for this phenomenal growth has been the government’s Motor Industry Development Programme (MIDP). Introduced in 1995, the programme is due to run, with gradual phasing out, until 2012.
Despite its relatively small size and production abilities (SA is ranked 19th in the world for vehicle production) South Africa’s automotive industry offers a number of competitive advantages to international concerns. These include world beating cost ability on short or low-volume runs, competitive tooling costs and a high degree of manufacturing flexibility.