OEM aiming for increased exports, more local content

14th March 2003 By: marisa rodrigues

The South African arm of Japanese original-equipment manufacturer (OEM), Nissan hopes to take its export successes to new heights this year.

Exports of the Hardbody one-tonner into Africa, and of alloy wheels, mainly to the US, have both proved tremendously successful, and Nissan SA executive vice-president Mike Whitfield expects both these markets to grow substantially in 2003.

The Nissan Hardbody is the leading South African vehicle exported into Africa, with Nissan South Africa holding 50% of the one-tonner market on the continent.

Both the left- and right-hand Hardbody are manufactured at the company’s Rosslyn facility, in Pretoria, with Nissan being the only manufacturer and exporter of left-hand drive pickups into Africa.

Manufacturing left-hand drive vehicles enables the company to service Ghana, Nigeria and Cameroon.

Major right-hand drive destinations for the vehicle are Zimbabwe, Kenya, Mozambique and Zambia.

Nissan South Africa also manufactures the right-hand drive Almera sedan and the 1400 half-ton pickup in South Africa.

However, these two vehicles only account for about 10% of the 5 881 units the company exported into Africa last year.

“We expect exports into Africa to grow about 6% this year to 6 250 units,” reports Whitfield.

The Hardbody was developed especially for African conditions.

“Some of the success of the vehicle can be attributed to the fact that the total cost of ownership is not as high as it often is in Africa as, exporting out of South Africa, lead times are reduced and the necessary parts and back-up are more readily available,” he continues.

Alloy wheels exported by Nissan are manufactured for the company by Tiger Wheel and Tyre in Babalegi, Limpopo, and Alloy Wheels International, of Port Elizabeth, in the Eastern Cape.

In 2002 the company exported 460 000 wheels and expects this to increase to 750 000 this year. These wheels are exported mainly to Nissan plants in North America, but Japan, Mexico and the UK are also important markets.

“We expect exports of wheels to be approaching a million units a year within two years,” states Whitfield.

He indicates that access to raw materials, cheap electricity, high skill levels and the Motor Industry Development Programme (MIDP) are the main reasons for the export success.

The MIDP, extended until 2012, rewards manufacturers who export vehicles and components from South Africa with tariff reductions on imports of components and vehicles.

Trade agreements with the US, under the African Growth and Opportunity Act and the free trade accord with the European Union have also added to export growth in alloy wheels.

Nissan South Africa is in the process of investigating other component export opportunities, possibly catalytic converters, castings and leather seats.

Although Whitfield tells Engineering News that there are no plans to manufacture new vehicles in South Africa for export in the next two years, he notes that the company is constantly looking for new export opportunities, both within Africa and beyond.

“Although we continue to look for new opportunities, we will only go ahead with new export projects if we can achieve global competitiveness,” he points out.

The company also intends to increase local content to gain further export credits through the MIDP.

A total of R90-million will be invested by Nissan South Africa in localisation, which also includes investment in supplier tooling and production facilities.

This R90-million forms part of the R300-million to be invested this year in capital expenditure to position it as a potential manufacturing base for other markets in the world.

This will include updating its information technology as well as improving quality and building capacity.

Nissan South Africa plans to increase local content (in stages) on the Hardbody and Almera sedan through 2004 by 40%.

This will involve 500 additional components which will be sourced from South Africa, such as fasteners, brackets and seat frames. This will result in an estimated foreign exchange saving of over R100-million, together with new job creation.

“Localisation of content will mean reduced logistics cost, which will limit the company’s exposure to exchange rate fluctuations and will enable us to qualify for higher rebates through the MIDP,” explains Whitfield.

Nissan enjoys close to 10% of the local vehicle market, operating in about 54% of the market.

However, it is looking to operate in about 75% of the market by 2007 and, as a result, increase market share to about 14%.