Economic growth through export and local demand

The automotive sector is one of South Africa’s most important industries. Almost all leading car manufacturers are represented in the Republic of South Africa and the market is growing continuously. Since 1994 exports grew by nine times representing today 7% of the country’s total exports. The increased local demand by a growing black middle class contributes to the growth in the automotive sector. According to the National Association of Automobile Manufacturers of South Africa (NAAMSA) 715.000 cars had been sold in the last year. In 2005 the number was 617.000.

Motor Industry Development Programme

One of the reasons for the dramatic increase in this sector is Motor Industry Development Programme (MIDP) which has been introduced by the government in 1995. The programme will expire in 2012.

The MIDP pushes the export by giving several benefits to car manufacturers such as rebates for imported parts. With such a measure South Africa increases its competitiveness in order to increase the export quota and its desirability as a location for production.

The demand of car manufacturers for locally produced parts and units, rather than imported ones, increases steadily. This trend will accelerate once the MIDP has expired. Therefore suppliers in the automotive sector have good business opportunities in the near future. The market for car accessories also experiences an increased demand. The boost in sales figures for medium sized vehicles has its immediate effect on the demand for tuning sets, alloy wheels, hi-fi units, mobile phone solutions, etc. A similar development is expected in the maintenance sector with its demand for hoisting platforms, environment- and logistic systems.