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Car makers to double capex

Johannesburg - South Africa's automotive industry plans to inject around R4.7bn in new production facilities, and research and development this year - nearly double what was spent in 2009.

This is according to the National Association of Automobile Manufacturers of SA's (Naamsa) first quarter review of business conditions in the sector, which was released on Monday.

Naamsa said that projections for capital expenditure (capex) by the seven major vehicle manufacturers stand at R4.624bn, compared to R2.468bn spent last year and R3.289bn in 2008.

Most of this money is intended for boosting local content, exports and production facilities.

"The decline in capex during 2009, was in part due to the impact of the global financial and economic crises," said Naamsa, in a statement.

The organisation added that the jump in planned capex is thanks to various incentives for local component manufacturing in the impending industrial policy plan for the sector - the Automotive Production and Development Programme (APDP).

So far, Ford, BMW South Africa and Volkswagen SA have announced investment plans, with a collective value of R9bn, which they will roll out over the next few years.

Naamsa also said that employment levels have risen by 4% during the first quarter of the year to 31 357 jobs.

"This can be attributed to additional recruitment at three of the industry's major employers," said Naamsa.

Further, most car manufacturers in the country reverted to a normal production week. Many vehicle makers had cut shifts due to low demand in the automotive sector in 2009.

- Fin24.com

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