PORT ELIZABETH, South Africa - The history of the auto industry in South Africa has been long and varied, with ups and downs that make other countries' auto industries look stable. Imports ruled from 1896 until 1924 when Ford Motor Co. opened the first assembly plant here to build Model Ts from complete knocked down (CKD) kits.

General Motors Corp. followed two years later with its first assembly plant, also in Port Elizabeth, which to this day remains the center of the auto industry in South Africa.

GM and Ford were dominant. American cars suited South African tastes. The cars proved to be tough enough for the poor roads. But by the mid-1950s, American cars grew larger and fell out of favor. South African drivers turned to European models.

Ford and GM plants in South Africa met the challenge by assembling and manufacturing cars based on their European ranges. On the whole, most vehicles essentially were the same as vehicles in Europe, although some vehicles were localized with different engines or slightly modified bodywork.

The first Volks-wagen Beetle in South Africa was assembled in 1951 in a factory that had been making Studebakers. VW took a controlling interest in 1956, and it became a leading manufacturer. VW/Audi is now No.2 in both car sales and production, with a 1997 share of more than 20% in both categories.

Local content rules were introduced to encourage manufacturers to invest in South Africa. By 1974 there were 14 manufacturers producing local cars. Over the years, the dearth of imports led to formation of a non-competitive marketplace with less and less choice, high prices and so-so quality.

The market was further strained when sanctions were imposed in the apartheid days - and many manufacturers withdrew from the country, including Ford and GM, which in some cases hurt local employment by closing factories.

It's now four years since Nelson Mandela came to power and new export credits have been introduced, allowing a healthy stream of vehicle imports. The government's idea was to encourage exports and to turn the South African auto industry into an important global manufacturing location. The country's Motor Industry Development Program (MIDP) works with auto manufacturers, component suppliers, the retail sector and trade unions to fulfill this goal.

The changes have opened up the market to such an extent that South Africans now enjoy as large a selection of vehicles as anywhere in the world.

Hardly any manufacturers lack at least some presence in South Africa. Rapid growth of vehicle importers without a local manufacturing stake has been possible as they obtain export credits from component or vehicle exports.

One of the MIDP's main targets of forcing rationalization and more viable local production runs has not been achieved, so vehicle assemblers are expected to face tough new regulations under which they will be forced to drop models that do not achieve at least 15,000 units annually in sales.

That's not an insignificant number in this market. It represents about 4% of the 366,000 vehicles registered in South Africa in 1997.

The MIDP had hoped that low-volume models would disappear to be replaced with higher volume models suitable for export.

Ironically, the regulations also have led to price wars that have resulted in some bargains. This, of course, has affected the profitability of some manufacturers. For example, Volkswagen still prices the old Golf Mark I as an entry-level vehicle that sells for under $7,000, making it one of the lowest priced cars in the world.

Component exports have taken off while vehicle exports have gotten off to a slower start than hoped. VW South Africa is leading the way with a recently signed order from Volkswagen AG to supply 60,000 Golfs per year for shipping to the U.K. and other right-hand-drive countries around the world. During a visit to the factory, new V5 Golf Mark IVs were seen with "Made for Ireland" stickers on them.

Ferdinand Piech, VW's chairman, tells WAW that he would like to see Volkswagen South Africa "building engines or gearboxes in large volume for export to VW plants all over the world. It does not make much sense to build completed vehicles in such low volumes."

Total South African vehicle production - including CKDs - in 1997 fell just a little under 375,000, down from about 404,000 in 1996. Passenger car production totaled 240,000 in 1997, a slight drop from 250,000 in 1996.

BMW AG actually was the first South African-based manufacturer to export in any quantity when it shipped 3,000 3-series models to Britain in the first half of 1998. Its factory in Pretoria only produces 3-series BMWs and a few Land Rover Defenders. The facility recently underwent a 1 billion-rand ($181 million) expansion and modernization, boosting production threefold to 40,000 cars annually, up from 13,000.

Another factory only producing one model is Delta Motors with its Straundale plant assembling Opel Corsas from components shipped in from Brazil.

Former GM managers created Delta Motors when GM withdrew from South Africa. GM since has purchased a 49% equity in the company.

A tour of the Corsa assembly line shows how efficient it is for assembly of one model from pre-stamped body panels and other semi-assembled components.

Another GM plant in Port Elizabeth is regarded as a showcase for the South African automotive industry because it exceeds current industry productivity benchmarks, according to the National Productivity Institute. The plant is a former Ford Sierra plant that was purchased from Samcor (local producer of Ford, Mazda and Mitsubishi models) in 1994 as an empty shell. It allowed Delta the chance to build a "greenfield" factory using the most up-to-date assembly methods and technologies. Output per employee is currently four times higher than the South African average.

Some of the latest technology in place includes a fully automated Preciflex body buck or main framing fixture used in body assemblies; state-of-the-art fully radiant heat ovens in the paint shop; and a computerized vehicle-tracking system. Delta says all aspects of "lean manufacturing" practice have been integrated into the new plant.

A tour of the VW factory paints a different picture. In one sprawling facility giant presses stamp out body panels for the VW Golf, Microbus and Polo. These models - with high local content - go down assembly lines alongside models such as the Audi A4 and the new Golf Mark IV, which are assembled from components shipped in from Germany.

It is quite amazing to see Mark I and Mark IV Golfs going through the factory on parallel lines. The logistical complexity of the VW production facility compared to the Corsa line is an eye-opener. Despite this, VW will overtake Toyota as South Africa's biggest automaker. With the new export order VW production in South Africa likely will top 120,000 units annually, besting 1997 Toyota numbers by about 25,000 units.

In all, there currently are seven auto manufacturers in South Africa. But strange bedfellows mean there are more like a dozen or so auto companies with locally assembled models. In addition to the massive VW plant, assemblers include:

n BMW

n Mercedes-Benz, which makes Honda and Mitsubishi models under contract.

n Samcor, a locally owned company, assembles Ford, Mazda and other Mitsubishi models.

n There's also Hyundai and Volvo production that has all of the benefits of local South African assembly just over the border at Gaborone at the Motor Company of Botswana.

n Delta produces Opel as well as Isuzu pickups and trucks.

n Nissan produces Fiats under license.

n That leaves Toyota to concentrate on its own models.

Toyota has been the No. 1 manufacturer in sales volume for 15 years. Toyota produced and sold nearly 59,000 cars in 1997 for a commanding 24% share. Toyota's dominance of the bakkie (pickup truck) market gave it a whopping 30.3% share of the country's commercial vehicle market in 1997 with more than 38,000 sales.

In overall vehicle sales Toyota's nearly 100,000 volume constitutes about a 27% share of the South Africa market. No.2 overall is GM at 16% and VW is No.3 at 15%.

On the component side, exports are gaining ground in several areas. For example, AutoCat (jointly owned by Ecia and Ebeospacher) assembles more than 1 million catalytic converter systems annually for numerous manufacturers, including those for all right-hand-drive BMWs. The VW factory makes replacement subsystems for several of its models that are shipped all over the world.