SA Auto industry is healthy, for now.

 

Inaugural SA AutoWeek

Let’s not underestimate the strength of the automotive sector in South Africa. To have bounced back to 2019 levels after two horrendous Covid years is indeed a spectacular achievement. But it almost slipped away completely were it not for the timely intervention of one President Nelson Mandela ably supported by then Minister of Trade and Industry, Alec Irwin and thereafter his successor Rob Davies.

After the dawn of democracy, the auto industry was on the verge of folding up and it took Mandela and his team many months of advocacy and negotiations with auto manufacturers around the world to get them to remain invested in South Africa.

Subsidies for the Auto Industry

This agreement brokered in the nineties ensured that motor manufacturing remained a subsidised industry with government leading the way to create the most enabling policy environment for auto manufacturing to survive and thrive. This led to successive iterations of subsidy packages the last two of which were the Motor Industry Development Plan(2005-2012) and thereafter the Automotive Production Development Plan( 2013-2020) which was extended into Phase 2 which we are currently in the midst of.

Transitioning from ICE to NEVs

Fast forward to 2022 and the fourth industrial revolution has firmly gripped the world not least the automotive sector. Despite the imminent phasing out of internal combustion engines(ICE) the South African auto industry still remains firmly rooted in the ICE market. The days of unrivalled dominance in the African market are fast disappearing with countries like Morocco and Kenya well on their way to challenging this dominance.

To further exacerbate the situation our key export geographies of the EU and the UK have sounded the death knell for ICE vehicles. This means these powerful export markets will no more be accepting our ICE vehicles which is tantamount to economic disaster. Yet we continue to dither…

Eighteen months after releasing the Green Paper on New Energy Vehicles(NEVs) Minister Ebrahim Patel and his department had not progressed the legislation. We therefore waited with bated breath at the inaugural national auto week #nationatolautoweek to hear him make that ground breaking announcement that would catapult the South African auto sector into the fourth industrial revolution.

The Big Announcement

But alas the announcement never came. Instead he gave us some encouraging news albeit tempered with caution and quiet optimism. Government is very close to announcing a financial package in the 2023 budget that hopefully will strike a balance between subsidising the manufacturing of NEVs as well as providing buyers of NEVs with subsidies. This news is great news if it does come to pass.

The automotive sector is cautiously optimistic and will remain so until a more detailed NEV roadmap is approved and most importantly subsidised. In the meantime NAAMSA has begun the process of preparing for the inevitable transition to NEVs and although it won’t take place overnight, the transition will have to be done systematically to prevent the destabilising of this important industry.

Inevitably, the transition to NEVs will bring with it much anxiety from workers about the safety of their jobs. Rather than fighting the inexorable wave of change it is vital that our workforce is upskilled and reskilled to prepare for the inevitable. 

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EV01 Awareness and Public Education