South African vehicle and component manufacturers have only one thing on their Christmas wish list — that 2026 will bring clear vehicle policy and an end to what some call the government’s “laissez-faire” attitude to the turmoil in the motor industry this year. New-vehicle sales are booming. Figures released last week show that for the 11 months to end-November, aggregate sales of cars and commercial vehicles, at 547,966, were 15.4% ahead of last year’s 474,876 at the same stage.
However, local companies’ share of the market is shrinking rapidly in the face of imports. As they prepare to close down operations for the annual holiday break, executives will have in mind the age-old expression, “Hope for the best but prepare for the worst.” The past year has been a difficult one for vehicle manufacturers and their suppliers. It has reinforced the fact that the 2021-35 Automotive Production & Development Programme (APDP) and the umbrella South African Automotive Master Plan are not working as intended.
The optimism that accompanied their announcement in 2018 has largely evaporated. They are in decline. The same is true of local content in South African-made vehicles.
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Racial transformation through the creation of black-owned vehicle companies is also years behind schedule. Then there is the question of electric vehicles (EVs). South Africa exports almost two-thirds of the vehicles it manufactures, most to the EU, which, like many regions, plans to ban the sale of traditional petrol and diesel internal combustion engines (ICE) after 2035.
South Africa is predominantly an ICE producer, and companies are desperate for the government to support their shift to EV production. Current APDP incentives do not distinguish between ICE and EV, but the industry says more needs to be done to encourage investment in EVs before export opportunities are lost. The government’s support so far has been half-hearted.
The department of trade, industry & competition did not respond to questions for this article. Most immediately though, the local manufacturing industry wants the government to halt the growing market dominance of imports, from India and China in particular. Some local brands are becoming virtual spectators as these new, low-priced competitors gobble up market share.
Last week Isuzu Motors South Africa MD Billy Tom accused foreign manufacturers of “dumping” vehicles — selling them below cost. Production numbers in India and China indeed give their industries a huge unit cost advantage. And in China there is enormous vehicle manufacturing overcapacity, while government-owned motor companies enjoy big production subsidies.
But dumping? Justin Barnes, a leading architect of the current APDP, asked, “Is it dumping or just very aggressive market entry?” Whatever the answer, the local industry wants the government to act. If not, says Tom, the very existence of the South African industry is at risk.
This year the industry asked for the 25% duty on imported vehicles to be raised to 30%. Some companies are pushing for 35%. In addition, vehicle manufacturers have asked to absorb excess APDP incentives, earned through production and local content, into their business.
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