Policy uncertainty and slow reform are placing South Africa’s automotive industry at risk, with long-term investment decisions increasingly under pressure, according to BMW South Africa CEO Peter van Binsbergen. Speaking to Business Day on the sidelines of a BMW media engagement at the company’s headquarters in Midrand on Wednesday and after parliamentary briefings this week, Van Binsbergen said the automotive masterplan (SAAM 2035) was built on economic assumptions that have not materialised, while delayed policy adjustments are eroding investor confidence. “When the master plan was created, we had very different assumptions for South Africa’s economy and trajectory ahead.
So we expected a much stronger domestic market, which hasn’t come, as we expected it,” he said. That the domestic market has not grown as projected has fundamentally changed the outlook for local production. Read:SA weighs antidumping duties on Chinese and Indian cars South Africa aimed to significantly increase vehicle production, localisation and employment under SAAM 2035.
Instead, locally produced vehicles now account for only about one in three cars sold domestically, down from two in three previously. Van Binsbergen said this decline in local market share undermines economies of scale that are critical for sustaining manufacturing and supplier networks. Volume and efficiency are the backbone of local production, he said.
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When imports replace locally produced vehicles, that scale is eroded and localisation becomes harder to justify. You need the right policy, and you need policy certainty. At the moment, there is a lot of uncertainty, and that affects confidence.
Policy certainty is essential for carmakers, which typically invest in cycles of seven to 14 years. Uncertainty around incentives, tariffs and the future regulatory framework made it increasingly difficult to justify fresh investment. At the moment, there is a lot of uncertainty, and that affects confidence,” he said. While BMW has invested more than R17bn in its Rosslyn plant since the mid-1990s and recently committed R4.2bn to electrify the facility for plug-in hybrid production, Van Binsbergen warned that future investments across the sector would depend on whether South Africa could restore a compelling business case for manufacturing.
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