1. South Africa’s Component Manufacturing Landscape: Challenging the Past to improve the future. The OEM Perspective Theunis Rootman Chairman: OEM Council 2014-10-14

2. Agenda Reflection – What has history shown us Our Focus: –Create the Base –Seek Opportunities –Make it Happen Conclusion

3. A) Reflection Delivery instability Poor Quality High Cost Current Performance level eroding base for future model sourcing Ideal Performance PERFORMANCE Time Reduce Risk Improve Stability

4. Manufacturing cost up to 40% higher than Competing Countries Industrial Development High Inflation linked with Unstable and Depreciating Rand Low levels of Deep Localisation Australia vs South Africa Competitiveness Localisation – Economies of Scale Collaboration A) Reflection Many Similarities

5. B) Our Focus Create the Base Collaboration Seek Opportunities Competitiveness Make it Happen Localisation

6. 1) Create the Base: Collaboration OEM Collaboration Commodity Rationalization/Clustering Analysis of Industry CapacityReview of commodity outlook Group/Cluster Commodities Define & Align Strategies with APDP and Economical viability Industrial Policy Support 4 Study potential projects/Commodities Agreement with “Parents” 1 3 2

7. 2) Seek Opportunities: Competitiveness Manufacturing Improvements

8. 1. Resource Development Skill Development Skill Retention Mindset 2. Supply Chain Visualisation Risk Identification CSR 3. Commonisation Process Tools Jigs 4. Localisation Engineering Changes Level2, Materials, Cons Benefit, Evaluation, Risk Mind-set Change 2) Seek Opportunities: Competitiveness

9. 3) Make it Happen: Localization Business Case Development Risk 1. High Forex Exposure 2. Evaluation Deeper Localisation Sub-tiers - Suppliers Drive Level 1 Parts – OEM Drive  

10. Electrical / Electronic Chassis and Drive-train Body 19% 15% 23% 10% Axles Differentials Drive shafts Brakes Harnesses Starter motors Alternators Wiper systems HVAC Cockpit Seats Door panels Carpets Bonnets Bootlids Side frames Doors 6% 5% 3% 7% XX%: % of total material cost YY%: True local material plus value add as % of total material cost Note: %’s indicative only Glass Paint Bumpers Mirrors Exterior Interior 33% 14% 3) Make it Happen: Localization Opportunities - especially lower levels

11. 11 3) Make it Happen: Localization Using Existing Areas as Priority

12. C) Conclusion Why should we do it? Unemployment: National Average = 24.9% SA Population by Age: 2012 Sustainable Business Sustainable Future 1 3 2 SA Thai India

13. Thank You