India leads South African auto imports, Mahindra and Tata strengthen presence
- In Reports
- 11:28 AM, Sep 17, 2024
- Myind Staff
India has emerged as the leading country of origin for vehicle imports in the South African automotive industry since 2013, according to the Automotive Business Council's BRICS+ Research Report 2024. The report attributes this to India's establishment as a global hub for small and entry-level vehicles, which dominate the domestic market in South Africa. Indian automakers like Tata and Mahindra have firmly established themselves in the South African market. Mahindra has even declared South Africa as their second home outside India, following significant investments, including a production line in Durban.
India and China have consistently been among the top 10 trading partners of the South African automotive industry since 2010, driven by the increasing level of automotive imports. More recently, China has solidified its position as the second-largest country of origin for vehicle imports since 2022, as financially constrained South African consumers have opted for more affordable model options from the Chinese market. Furthermore, China has been the leading source of aftermarket parts imports in South Africa since 2018.
The report also highlights the automotive trade balance in 2023, which is heavily skewed in favour of India, with an import-to-export value ratio of 97.7 to 1. For China, the ratio stands at 56.8 to 1, and for Brazil, it is 2.6 to 1. These figures underscore the importance of BRICS nations exploring complementarities, sharing experiences, and promoting capacity-building in automotive trade and investment.
The report credits South Africa’s admission to BRICS (Brazil, Russia, India, China, and South Africa) in 2010 for enhancing the country’s international stature and strengthening its trade and economic relations with these global economic powers. Following South Africa’s BRICS membership, automotive exports to BRICS nations increased from 2010 to 2011, driven by heightened interest in South African automotive products. However, between 2010 and 2023, automotive exports to India declined, and although exports to Brazil, China, and Russia reflected increases, they remained negligible in the context of South Africa's total automotive export revenue of Rand 270.8 billion in 2023.
The report cites several reasons for the different export performance with BRICS countries, including broader market and economic conditions, automotive policy factors, tariff measures, and country profiles that do not align with the premium passenger car models and bakkies manufactured in South Africa.
On the import front, significant increases were recorded from all four BRICS countries between 2010 and 2023, with automotive imports from China, India, and Brazil showing notable growth. The report also highlights the opportunities arising from the expansion of BRICS to BRICS+ with the admission of five new countries from January 2024.
This expansion is expected to reshape global industries, including the automotive sector. The integration of new member countries promises to optimise automotive supply chains within the BRICS+ framework. According to the report, BRICS continues to attract diverse potential members due to its shared goal of creating a more equitable global landscape that many emerging economies believe is currently biased against them.
Image source: Business Standard
Comments