KZN’S lone automotive original equipment manufacturer, Toyota South Africa Motors (TSAM) has secured over R1.1 billion investment in a new stamped parts facility located at Dube TradePort.
Toyota Tsusho Africa (TTAF), a subsidiary of Toyota Tsusho Corporation, in collaboration with Ogihara Corporation (OTC), based in Thailand, and TSAM announce the formation of a new joint venture, Ogihara South Africa (OSA) at a ground-breaking event at the construction site in Dube TradePort Zone 2 on 22 August.
The strategic investment in the South African automotive industry is apportioned with TSAM contributing R545 million and the TTAF-Ogihara joint venture investing R630 million. Toyota Tsusho Africa specialises in supply chain management and production assembly, delivering a range of value-adding solutions to the local automotive industry. Offices, warehousing, and processing facilities are located in Durban and Pretoria.
Ogihara Corporation manufactures die-press automotive body parts and assemblies. The company produces products out of high-strength steel and aluminium, and tool-and-die assemblies primarily for the automotive industry. Ogihara SA will be a new addition to the group’s six existing affiliated companies.
The new partnership is poised to significantly add to local manufacturing with the production of small to medium stamped parts for TSAM. Production is set to commence in July 2025. This strategic partnership will not only raise TSAM’s local procurement ratio by 2%, translating to an estimated R700 million in annual spend, but will also drive significant job creation, with 250 new jobs expected by 2026.
Speaking at the event, Andrew Kirby, CEO and president of Toyota South Africa Motors, said, “This joint venture marks a significant step towards our Local Value Addition (LVA) improvement strategy, by localising the production of these critical components. The inclusion of Ogihara SA in our local manufacturing ecosystem will not only create new job opportunities but will also enhance our capabilities in producing high-quality body parts for the automotive industry. This collaboration exemplifies our commitment to localisation and underscores the possibilities for growth and development in the KZN province.”
An initial 114 parts for the Toyota Hilux and Fortuner models will be produced at the plant and the venture will phase in the sourcing of additional local press parts that are currently imported. This significant step will not only boost local industry capabilities and economic growth but will also lead to an increase of 25,000 tons a year in locally procured steel.
Localisation and the multiplier effect
The South African Automotive Masterplan (SAAM) 2021-2035 aims for South Africa to manufacture 1% of global vehicle production – equivalent to 1.4 million vehicles – a year by 2035. This target is set to significantly enhance the country’s position in global vehicle production rankings. Furthermore, the plan seeks to double employment in the automotive sector to 240,000 jobs.
Another goal in the Masterplan is for the automotive industry to achieve 60% localisation by 2030.
Aligned with these national objectives, TSAM says it is committed to elevating its local procurement ratio. Leveraging TTAF’s extensive business expertise and operational efficiency in South Africa, this joint venture will support TSAM’s goal by localising the production of automotive stamped parts.
“As a committed corporate citizen operating within South Africa, this collaboration not only aims to bring significant foreign direct investment to our country but will also create numerous job opportunities and further deepen localisation within our economy, in line with the objectives outlined by the South African Automotive Masterplan,” said Kirby.
Ogihara SA also offers an important lifeline to South Africa’s troubled steel sector where the future of ArcelorMittal’s steel plant in KwaZulu-Natal still hangs in the balance.
KZN MEC for Economic Development, Tourism and Environmental Affairs, Rev Musa Zondi said, “Through its commitment to source 90% of steel sheets locally, Ogihara SA will strengthen South Africa’s steel manufacturing sector which is critical for the country’s industrialisation objectives. The industry is known to accelerate economic growth through its contribution to large infrastructure and manufacturing projects. Because 54% of a vehicle’s manufacturing comprises steel, this investment is an important contributor to the growth and sustainability of this sector too.”
In addition to sourcing steel locally, Ogihara SA will further contribute to the local economy by sourcing services related to packaging, pallets, office supplies, garden services, building maintenance, canteen services, and maintenance consumables from local businesses, according to Dube TradePort (DTP).
An ‘isolated’ OEM
There are currently seven automotive original equipment manufacturers (OEM) in South Africa, with Isuzu, Volkswagen and Mercedes-Benz based around Gqeberha in the Eastern Cape.
The eighth OEM, Stellantis is setting up a R3 billion facility in the nearby Coega Special Economic Zone. BMW, Ford and Nissan are based in the Tshwane area. These two regions are well-supported by the Tshwane Automotive Economic Zone and automotive support programmes in the Eastern Cape.
With a manufacturing plant at Prospecton, TSAM is fairly ‘isolated’, although a regional automotive supplier park has been discussed.
In a media release, Rev Zondi said Duve TradePort will be both the developer and operator of the proposed Durban Automotive Supplier Park (ASP), in collaboration with the eThekwini Municipality. “In advanced planning stage, this will be located to the south of Durban and also aims to attract component manufacturing and car assembly firms.”
The automotive industry is South Africa’s largest manufacturing sector. Currently, KZN’s automotive manufacturing sector is concentrated in the South of Durban and contributes about R21 billion to the local economy per annum and employs some 20,000 people.
According to the Department of Trade Industry and Competition (DTIC), the manufacturing segment of the automotive industry currently employs around 115 000 people across its various tiers of activity (from component manufacturing to vehicle assembly) which, combined with the industry’s strong multiplier effect, leads to it being responsible for around 320,000 jobs in the South African economy.
According to the Automotive Business Council (formerly Naamsa), the automotive industry contributes 5,3% to national GDP. In 2023, record high vehicle exports ensured that the automotive industry outperformed the rest of the manufacturing sector.
Policy pathways in a disrupted industry
Similar to other export-led industries, like citrus and wine, international demand for local production keeps the industry thriving. Increasing demand for New Energy Vehicles (NEV) in SA’s main automotive export markets, with minimal local demand, signals disruptions ahead.
The Automotive Business Council published an insightful thought leadership discussion document on South Africa’s NEV Roadmap in February 2023. In December, the DTIC published a White Paper outlining government policy on NEVs, and the Minister of Finance announced supply-side incentives for NEV production in the 2024 Budget.
DTIC Minister, Parks Tau, who spoke at the event, said government policy remains driven by the December White Paper. He said, “The DTIC will continue to drive the importance of increased localisation as the domestic sector moves into electric and other new energy vehicle assembly platforms.”
Dube TradePort
Minister Tau also recognised the role that Dube Tradeport, as a Special Economic Zone, is playing in becoming a catalyst for economic development in KwaZulu-Natal.
Ogihara SA’s 32,000 sqm site at DTP’S TradeZone 2 will include a manufacturing and assembly plant relocated from Thailand. “We believe that is because we can meet the private sector’s needs for a stable environment which is secure, well operated, has sustainable and green energy as internationally green supply chains and green production are becoming very important for the final product and market,” said Hamish Erskine CEO Dube TradePort.
Ogihara SA is the single largest investment secured by DTP since its inception alongside Durban’s King Shaka International Airport. This is the second automotive sector investor to set up in DTP after Mahindra South Africa commissioned its state-of-the-art vehicle assembly facility in 2018.
