Nissan Motor
Co. plans to build a new model of pickup at its South African plant starting in
2018 and will increase production from the facility as the Japanese carmaker
seeks to capitalize on future demand for new vehicles on the continent.
Nissan sees
output from its factory in Rosslyn, north of Pretoria, rising to as many as
80,000 vehicles a year as the new model comes online, compared with about
40,000 now, Nissan South Africa Managing Director Mike Whitfield said in an
interview on Monday at Bloomberg’s Johannesburg office. The company is in talks
with suppliers about the additional model, and will probably announce details
of the plans in early 2016, he said.
“Like any
investment decision there are a number of key milestones, but we are moving
forward," Whitfield said. “It would be a new product with a lot more
potential in Africa."
South Africa uses state incentives to attract companies including
Nissan, Ford Motor Co. and Volkswagen AG to set up and reinvest
in factories in the country. The government program will be extended beyond the
current timeframe of 2020, while the production threshold to qualify for
benefits will fall to 10,000 vehicles a year in 2016, the Department of
Trade and Industry said on Sunday. The number of vehicles produced in South
Africa is projected to rise to 622,000 this year, according to the National
Association of Automobile Manufacturers of South Africa.
There were
277,491 cars produced in South Africa last year, of which 55 percent were
exported, according to Naamsa. The percentage of exports will probably rise to 68
percent this year, the body said.
“The fact
that they’ve clearly stated there will be a policy after 2020, that they will
work with the industry in 2016 to formulate the next phase of the auto policy,
is critical," Whitfield said. “You wouldn’t be able to make investment
decisions" otherwise, he said.
While the
lower production threshold makes it easier for new entrants to start making
vehicles in South Africa, scale is still a major driver of profitability,
Whitfield said.
“At 10,000 you can manufacture but you’re not going to do it
efficiently," he said. “We need to stretch way beyond 50,000."
Full Capacity
Nissan
produces the NP200 half-ton pickup and NP300 one-ton Hardbody at its Rosslyn
assembly plant. The company plans to eventually reach the factory’s full
capacity of about 100,000 vehicles per year on a two-shift basis,
Whitfield said.
While
competitors such as BMW AG export South Africa-made vehicles as far as the U.S.
and Japan, Nissan’s local unit is focusing its efforts on sub-Saharan Africa,
where the company already has the second-largest market share when South Africa
is excluded.
“For us, the
future potential of this industry is going to be the future growth of
Africa," Whitfield said. “We don’t see this as a major export plant into
the U.S. and Europe," which involve significant logistics costs, he said.
“It just doesn’t make sense."
Automakers in
South Africa will start the next round of wage negotiations with local unions
early next year, with the aim of reaching an agreement by July, Whitfield said.
The industry “can’t afford" a repeat of a three-week
strike in 2013 that forced production halts.
“We’ve all
used that last episode to learn what not to do going forward," Whitfield
said. “There’s a very clear intention from all stakeholders to avoid it."
Source: Bloomberg Business
by Liezel Hill
Matthew and
Winkler
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