The Department of Trade and Industry’s (dti) Automotive Masterplan 2035 could be adopted by Cabinet “within the next few months”, according to dti director-general (DG) Lionel October.
It will replace the successful Automotive Production and Development Plan (APDP) which expires in 2020. Delivering the keynote address at the Manufacturing Indaba held at the Sandton Convention Centre last week, the DG pointed out that since the implementation of the automotive incentives programme (APDP) in 2013, exports of vehicles had doubled and the industry had seen some R45 billion worth of investment from some of the world’s top car manufacturers.
According to October, the automotive sector currently contributes 33% to manufacturing gross domestic product (GDP) and around 6% to South Africa’s overall GDP. “Being fully aware of stiff competition we will continue to face from other national production centres around the globe, government is extremely keen to maintain this momentum.”
He said approximately 600 000 vehicles were produced annually under the APDP. October added that the Automotive Masterplan would focus on growing exports and “securing the highest levels of localisation and empowerment”. He did not disclose further details of the programme but Minister of Trade and Industry, Dr Rob Davies, has previously hinted at “some surprises” in the new plan, noting that some carmakers “may not like it”.
There are rumblings that the new plan will require an increase in locally sourced products to around 60% – a theme that was widely discussed at this year’s Indaba. This is roughly double what most producers are currently achieving.
Global manufacturers have long been vocal about the challenges of investing in the automotive sector in South Africa, pointing out that the local labour force is volatile and unpredictable and that it costs more to get the final product to the export market due to the country’s location far from its markets.
Volkswagen South Africa MD, Thomas Schäfer, was recently quoted by the Sunday Times as saying: “South Africa is not a logical or viable production location, so we need a stable and attractive automotive policy.”
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The Automotive Masterplan will focus on growing exports and securing the highest levels of localisation and empowerment. – Lionel October
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SA's automotive sector currently contributes 33% to manufacturing GDP.
