David Winter is the manager of Frost & Sullivan's South African Programme Manager. He has participated in a number of F&S proprietary research projects conducted for specific clients in the nation.
How much has South Africa's auto market grown over the past few years?
South Africa's auto market has shown sustained growth over recent years. The sector realized a compound annual growth rate of 4.7 percent for the period 2004 – 2007 and is anticipated to make an 8 percent contribution to GDP by 2013. South Africa produced 534,490 vehicles in 2007 and the South African government is focused on increasing this to 1.2 million units by 2020.
To what extent does South Africa have an automotive export market vs. what they import from the U.S. and other countries?
South Africa's Motor Industry Development Programme (MIDP), which expires in 2012, is focused on encouraging exports. However, in 2007 South Africa exported 171,237 vehicles compared to 312,855 imports, resulting in a negative balance of trade. The MIDP is to be superseded by the Automotive Production and Development Programme (APDP) in 2013. This government supported programme will focus on encouraging the inclusion of locally manufactured components in vehicles. Import tariffs of 25 percent for completely built-up units and 20 percent for components will be implemented from 2012.
What demographic changes are taking place within South Africa's auto marketplace?
Consumer spending among South Africa's emerging middle class has been bolstering recent economic growth, which was spurred by a low interest rate and inflationary environment. However, aligned with global trends, South African economic growth has softened in the last 12 months. Further, the South African Reserves Bank's inflation-targeting strategy has resulted in an increase in interest rates, which has lowered disposable income levels.
Is South Africa dealing with high energy costs? How has this impacted the type of vehicles they buy and options they request?
Yes, fuel has always been relatively expensive in South Africa, which has encouraged car owners to prefer smaller, fuel-efficient vehicles.